Now our January busy season is over, I have had some time to digest the Spanish Tax Office’s updates for the year 2014. Below is a summary; you will find all of up-to-date rates and allowances on our Spanish tax database starting at http://www.spainaccountants.com/tax.html
1. Wealth Tax (Impuesto Sobre el Patrimonio) has been effectively abolished again. The actual wording of the law is that everyone has a 100% deduction in their tax payable. There is therefore no need to submit Spanish Wealth Tax returns from 1st January 2014 onwards.
This abolition was expected, as Wealth Tax was only re-introduced in 2012 and 2013 on a temporary basis.
2. State income tax rates remain the same as last year. Regional income tax rates have changed in certain Comunidades Autonomas, please see the tax rates and allowances page on our website:
3. Income tax retentions remain the same as last year. For instance on self-employment income (21% / 9% for new businesses) and rental income (21%). Toward the end of last year, some commentators were anticipating these retentions to be reduced back to their pre-2012 rates, but this has not happened.
4. Tax rates on capital gains and savings income, and tax rates for non-residents remain the same.
5. Company tax rates and payments on account remain the same.
6. VAT (IVA) rates remain the same.
7. Personal, family and employment related tax allowances remain the same for the third year in a row. Presumably the Spanish government feels that this is fair given the lack of cost inflation in Spain over the last few years. Let’s hope that they start to increase these allowances next year once the economy starts (we hope !) to grow again.
8. The 20% reduction in taxable income for employment-creating sole trader businesses has been extended for at least another year. In short, if you are an autonomo (with turnover less than 5 million Euros) who employs between 1 and 24 Euros, only 80% of your profit is taxable.
And that’s pretty much it ! The income tax increases that were introduced to try to reduce the budget deficit are still in place. We will see what happens this time next year when the Spanish economy should be growing moderately and the budget deficit reduced further.