We are leaving behind a year which leaves us in a serious negative trend, menaced of entering into a new recession.
The Spanish Official Gazette published Royal Decree 20/2011, of December 30 2011, with urgent measures to correct our public deficit.
On the same day, four ministers of the new Spanish Government, appearing in a press conference with serious faces, have explained the need of these measures to reduce our public deficit, which had resulted more negative than expected.
And, as expected (or, more exactly, feared), taxes are the chosen tool to increase the State’s income.
To ameliorate the public deficit, a general increase of tax rates is introduced for fiscal years 2012 and 2013, mainly affecting Personal income tax rates. The general State scale is increased with a complementary burden of up to 7 percentage points (for an annual taxable income exceeding 300,000.20€) and also the reduced scale on savings (mainly, capital gains, interest and dividend incomes) reaching up to a marginal tax rate of 25% for this type of incomes above 24,000.00€. In accordance with these measures, withholding taxes are increased, especially those applicable to Payroll income, as from February 1, 2012. Withholdings on Corporation taxes and on Non-residents income are slightly increased (with effects, in this latter case, only when no Double taxation treaty or EU Directive regulations result applicable).
But, despite these changes which may be qualified of a negative nature, (for sure, from the taxpayers point of view), we really welcome the following two measures, which are aimed at promoting the real estate Spanish market and can still constitute new opportunities of investment into Spain:
- The tax credit for investments in home dwellings is extended, retroactively to January 1, 2011, to all Spanish resident individual tax payers, irrespective of their level of taxable income, (it was only applicable to taxpayers with taxable income below 24,107.20€).
- The 4% VAT rate on purchases of new Spanish real estate properties constituting a dwelling, which we anticipated in a previous post, is extended from December 31st, 2011 to December 31st, 2012. So, ultimately, it implies that you have got one more year with a 4% reduction in prices.
Midnight on New Year’s Eve. Upon each and every stroke, telling us that 2012 is about to enter into our lives, we ate the twelve grapes. We made our resolution so that something better would happen in the year that was about to start. Hoping that we finally reach the place we deserve. Believing, as we have been told, that anything negative should only be of a temporary nature…