Spain Tax Alert - 4 January 2012Tax measures introduced to tackle public deficit |
By Brian Leonard and Francisco Martin Barrios
The newly elected Spanish government published a decree on 31 December 2011 containing urgent budgetary, tax and financial measures to control the massive public deficit (Royal Decree-Law 20/2011, dated 30 December 2011). The austerity measures increase a number of tax rates and are effective as from 1 January 2012.
Corporate income tax
The corporate income tax rate remains unchanged. However, for 2012 and 2013, the general withholding tax rate for the advance (non-final) tax on certain types of income (e.g. dividends and interest and income from the leasing of real property) obtained by Spanish resident entities subject to corporate income tax is increased from 19% to 21%.
Nonresidents income tax
The tax rates also have been increased for certain types of income derived by nonresidents during 2012 and 2013. Amongst others:
- The general rate on income derived by a nonresident without a permanent establishment in Spain is increased from 24% to 24.75%;
- The withholding tax on dividends, interest and capital gains derived by a nonresident without a permanent establishment is increased from 19% to 21%; and
- The branch profits tax applying to after-tax profits remitted by a Spanish permanent establishment to its head office outside the EU is increased from 19% to 21%.
Personal income tax
A “complementary tax” to the general personal income tax has been approved for 2012 and 2013. The complementary tax is calculated on the brackets of the general net personal income tax base (which includes salary and wage income, income from economic and professional activities and income from the leasing of real property). The complementary tax rates range from 0.75% for the first tax bracket to 7% for income exceeding the new tax bracket of EUR 300,000 established for purposes of the complementary tax. The resulting general personal income tax scale is as follows:
| General net tax base (EUR) – From |
Remaining net tax base (EUR) – To |
Applicable tax rate (%) - 20111 |
Applicable tax rate (%) - 2012 & 2013 |
Rate increase (%) - Complementary tax |
|---|---|---|---|---|
| 0 | 17,707.20 | 24 | 24.75 | 0.75 |
| 17,707.20 | 15,300 | 28 | 30 | 2 |
| 33,007.20 | 20,400 | 37 | 40 | 3 |
| 53,407.20 | 66,593 | 43 | 47 | 4 |
| 120,000.20 | 55,000 | 44 | 49 | 5 |
| 175,000.20 | 125,000 | 45 | 51 | 6 |
| 300,000.20 | Above | 45 | 52 | 7 |
The complementary tax also is applicable to taxable savings income, which generally includes dividend and interest income and capital gains. In this case, the applicable rates range from 2% for income below EUR 6,000 to 6% for income over EUR 24,000. The resulting savings personal income tax scale is as follows:
| Savings net tax base (EUR) – From |
Remaining net tax base (EUR) – To |
Applicable tax rate (%) - 2011 |
Applicable tax rate (%) - 2012 & 2013 |
Rate increase (%) - Complementary tax |
|---|---|---|---|---|
| 0 | 6,000.00 | 19 | 21 | 2 |
| 6,000.00 | 18,000.00 | 21 | 25 | 4 |
| 24,000.00 | Onwards | 21 | 27 | 6 |
In line with the introduction of the complementary tax, the withholding tax rates applicable as an advance (non-final) tax to certain types of income received by resident individuals are increased for the periods 2012 and 2013. This is the case for the withholding on salary and wage income (i.e. income addressed in the first chart, above). Similarly, the withholding tax rate on dividend and interest income, income from intellectual property and income from the leasing of real property is increased from 19% to 21%. The withholding tax rate applicable to director´s fees is increased from 35% to 42%.
Other taxes
- Value Added Tax: The period of application of the 4% VAT rate set to expire December 2011 for the purchase of new housing has been extended until 31 December 2012.
- Local Real Estate Tax: For tax periods commencing in 2012 and 2013, the tax rate of the Local Real Estate Tax levied on the ownership of real property in Spain is increased for urban real estate property based on the year in which the cadastral value of the property was reviewed.
- General Tax Law: Several modifications have been introduced in the General Tax Law to implement the provisions in the EU mutual assistance directive (Council Directive 2010/24/EU, of 16 March 2010) into domestic law.
1 The tax scale could eventually differ, depending on the applicable personal income tax rules of the Autonomous Region.
Global Tax Alert - Spain
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