Tax benefits

In the report published in March 2023 (Report):

On 26 September 2022, an agreement was signed between the Tax Agency and MICIN for the evaluation of R&D&I projects related to the application of corporate income tax incentives, which establishes a stable framework that 11 BOE-A-2022-18991 Resolution of 10 November 2022, of the Undersecretary, publishing the Agreement between the State Tax Administration Agency and the Ministry of Science and Innovation, allows the tax enforcement bodies to obtain a reasoned report from MICIN regarding the taxpayer’s compliance with the scientific and technological requirements necessary to apply the incentives provided for in corporate income tax to R&D&I activities.

In the report published in March 2024 (Report):

Law 19/2013, of 9 December, on transparency, access to public information and good governance, imposed the mandatory disclosure of subsidies and other public aid.

Furthermore, any aid that is considered state aid for the purposes of European Union law, in accordance with the provisions of Article 107 of the Treaty on the Functioning of the European Union and its implementing rules, must be published in the National Subsidy Database.

Therefore, Royal Decree 130/20198, which regulates the National Subsidy Database and the disclosure of subsidies and other public aid, limits the registration of tax benefits that are considered state aid because they involve a selective economic advantage to those that exceed the minimum thresholds required by EU rules.

The deduction for research and development and technological innovation activities (tax incentive for R&D&I) is not considered state aid, and therefore the proposal must be rejected as it does not fall within the cases that determine the publicity of tax benefits.

In addition, Article 95 of Law 58/2003 of 17 December, the General Tax Law, establishes the confidential nature of data with tax implications and the impossibility of transferring or communicating it to third parties. This regime of confidentiality of tax data constitutes a right of taxpayers (Article 34.1.i) of the General Tax Law) and the tax authorities have a duty to guarantee it, as provided for in Article 95(3) of the LGT, which would prevent the recommendation from being implemented.

In the report published in March 2022 (Report):

Tax measures, such as those relating to tax benefits, which affect a particular sector, must always be adopted in accordance with this principle. With regard to these recommendations, it should be noted that any articulation of tax benefits is integrated into the strategic planning of the public policies to which it relates. Likewise, such planning includes forecasts of the effects that their implementation may have. An example of this is the Recovery, Transformation and Resilience Plan, which comprehensively covers measures and reforms in terms of both public revenue and expenditure and regulation.

Furthermore, the economic report on the respective modifications includes the estimated economic impact of the same, provided that such a calculation is possible.

With regard to ex-post evaluations, it is worth mentioning that, within the scope of Component 28 of the PRTR, a working group has been set up between the Institute for Fiscal Studies, the State Tax Administration Agency (AEAT) and the Directorate-General for Taxation, which is analysing 15 tax benefits.

In the subsequent update of December 2022 (Annex):

Tax measures, such as those relating to tax benefits, which affect a particular sector, must always be adopted in accordance with this principle. With regard to these recommendations, it should be noted that any articulation of tax benefits is integrated into the strategic planning of the public policies to which it relates. Likewise, such planning includes forecasts of the effects that their implementation may have. An example of this is the Recovery, Transformation and Resilience Plan, which comprehensively covers measures and reforms in terms of both public revenue and expenditure and regulation.

Furthermore, the economic report on the respective modifications includes the estimated economic impact of the same, provided that such a calculation is possible.

With regard to ex-post evaluations, it should be mentioned that within the scope of Component 28 of the PRTR, a working group has been set up between the Institute for Fiscal Studies, the State Tax Administration Agency (AEAT) and the Directorate-General for Taxation, which is analysing 15 tax benefits.

The strategic planning of the public policies to which the respective tax benefits relate is the responsibility of the relevant ministerial departments, which define the necessary protocols and analyse possible alternatives, such as direct aid via expenditure policies.

The classification by spending policies is set out in the General State Budget Law for 2022.

An example of the estimated ex ante impact of new tax benefits adopted is included in the 2022 Budget Plan, which details the measures adopted that have an impact on tax benefits, estimating their budgetary impact for 2021 and 2022.

With regard to ex post evaluations, the aforementioned working group published the first part of its analysis last March, with a study of five tax benefits:
– Adjustments to the tax base on income from certain intangible assets (corporate income tax).
– Special tax regime applicable to non-profit organisations (IS).
– Partial exemption from the special tax on certain lottery and betting prizes (IRPF).
– Exemption from income tax on earnings obtained abroad (IRPF).
– Special tax on coal (IC).
https://www.hacienda.gob.es/Documentacion/Publico/GabineteMinistro/Varios/31-03-22-Informe-Revision-Beneficios-Fiscales-2021.pdf

In the report published in March 2022 (Report):

The Ministry indicates that this recommendation has been implemented through the reactivation of the Working Group with autonomous communities, within the Fiscal and Financial Policy Council, created to agree on the methodology to be followed in compliance with Council Directive 2011/85/EU of 8 November 2011 on the requirements applicable to the budgetary frameworks of Member States, with regard to the tax benefits of the Autonomous Communities. Two meetings were held in 2021 (June and September), and another in February 2022.

In the subsequent update of December 2022 (Annex):

The Ministry indicates that this recommendation has been implemented through the reactivation of the Working Group with autonomous communities, within the Fiscal and Financial Policy Council, created to agree on the methodology to be followed in compliance with Council Directive 2011/85/EU of 8 November 2011 on the requirements applicable to Member States’ budgetary frameworks, with regard to the tax benefits of the autonomous communities. Two meetings were held in 2021 (June and September), and another in February 2022. The response of ‘proposal implemented’ refers to the fact that the working group is indeed active and that it is resulting in better coordination between the different levels of the administration, which is the recommendation made in the SR.

Although a formal document with the conclusions reached by this working group has not yet been drawn up, we can find an example of such coordination in the 2023 General State Budget Bill. This is, in the section on the estimated tax benefits for 2023, the adjustment to wealth tax due to the application of the joint limit with income tax: this has been the result of a joint study with the Autonomous Communities in the aforementioned Working Group, which concluded that this concept should no longer be considered a tax benefit, as it is a technical rule aimed at avoiding the confiscatory effect that could occur for taxpayers who have to pay both taxes.

In the report published in March 2023 (Report):

The crisis has led to the adoption of measures to support households in this area, particularly with regard to reducing gender bias, in the maternity deduction, extended in cases of receipt of contributory or welfare benefits from the unemployment protection system, or registration in the corresponding Social Security or mutual insurance scheme with a minimum period of 30 days of contributions (Law 31/2022, of 23 December, on the General State Budget for the year 2023).

In the report published in March 2022 (Report):

This proposal has been fulfilled by modifying the limits on the reduction in the tax base for contributions to social welfare systems.

In the subsequent update of December 2022 (Annex):

This proposal has been implemented by modifying the reduction limits on the tax base for contributions to social security systems.

FIRST. Article 51 of Law 35/2006, of 28 November, on Personal Income Tax and partially amending the laws on Corporation Tax, Non-Resident Income Tax and Wealth Tax, was amended with effect from 1 January 2021, by Article 62.1 of Law 11/2020, of 30 December, on the General State Budget for 2021. (https://www.boe.es/buscar/act.php?id=BOE-A-2020-17339#a6-4)

This measure modified the reductions for contributions to social welfare systems in order to encourage companies to contribute to their employees’ savings, increasing the applicable combined limit from €8,000 to €10,000, although limiting individual contributions by taxpayers to €2,000.

Therefore, the reduction was limited for higher individual contributions, which were concentrated among the highest incomes (in 2017, only taxpayers with incomes above €50,000 made contributions above €2,000 on average, so the reduction was regressive: it particularly benefited the highest incomes).

SECOND. Article 51 of Law 35/2006 of 28 November on Personal Income Tax and partially amending the laws on Corporation Tax, Non-Resident Income Tax and Wealth Tax was amended again, with effect from 1 January 2022, by Article 59.1 of Law 22/2021, of 28 December. (https://www.boe.es/buscar/act.php?id=BOE-A-2021-21653#a5-11)

With this amendment, the limit on individual contributions to taxpayers was reduced again, leaving it at €1,500, with the aim of continuing to improve the progressivity of the tax and promoting shared effort between workers and companies. In addition, it is expected that the limit may be increased not only through employer contributions, but also through employee contributions to the same social welfare instrument

, provided that these contributions are equal to or less than the respective employer contribution.

In the report published in March 2023 (Report):

Through Article 59 of the 2023 General State Budget Law, with the aim of assisting the sector of the population most affected by the current economic situation, comprising workers, pensioners, the self-employed and families with lower incomes, the amount of the reduction for income from work and the threshold above which it is applicable have been increased.

Previously, this reduction was applicable to taxpayers with net income from work of less than 16,825 euros, provided that they had no income, excluding exempt income, other than that from work.

Previously, this reduction was applicable to taxpayers with net employment income of less than €16,825, provided that they had no income, excluding exempt income, other than employment income exceeding €6,500. For individuals with net employment income equal to or less than €13,115, the reduction was set at €5,565 per annum, decreasing linearly to 0 for those with net employment income between €13,115 and €16,825.

With the amendment, the amount of the reduction is increased to €6,498 per year. Thus, as the reduction decreases linearly, the maximum amount up to which they benefit from the reduction also increases to €19,747.5 (equivalent to approximately €21,000 gross salary, compared to €18,000 gross per annum under the previous regulation).

In the report published in March 2024 (Report):

The second final provision of Law 12/2023, of 24 May, on the right to housing, includes a series of tax incentives applicable to personal income tax (IRPF) on the rental of properties intended for housing.

In particular, the previous 60 per cent reduction in the net income from residential rentals is modified, establishing a modulation of the same, with the aim of stimulating the rental of primary residences at affordable prices. Thus, the percentage reduction will vary depending on the situation:

• It will be 90 per cent in the case of new residential rental contracts signed in areas with a tight residential market, with a reduction of at least 5 per cent on the previous contract. It will be 70 per cent in the case of the incorporation into the market of housing intended for rental in areas with a tight residential market and rented to young people between the ages of 18 and 35 in those areas, or in the case of subsidised or protected affordable housing, rented to the public administration or third sector or social economy entities that are non-profit organisations, or covered by a public housing programme that limits the rental income.
• A reduction of 60 per cent on net income may be achieved when renovation work has been carried out in the previous two years.
• In any other case, the reduction will be 50 per cent.

Link to the approved regulation: https://www.boe.es/buscar/act.php?id=BOE-A-2023-12203#df-2

In the report published in March 2023 (Report):

The reduced rate for beverages with added sugars or sweeteners has been excluded.

The review of reduced rates has been influenced by the economic crisis caused by the pandemic, leading to the adoption of measures consisting of reduced rates for certain goods necessary to combat the health crisis.

More recently, measures have been aimed at mitigating the effects of rising energy prices, such as the application of a 5 per cent rate to gas and electricity. This rate has been extended to 2023 by Royal Decree Law 20/2022, which has introduced a significant change for this year. This is the application of a 0 per cent rate to basic foodstuffs — bread, flour, milk, cheese, eggs, fruit and vegetables — and a 5 per cent rate to oil and pasta.

The aim is to help the most vulnerable families and reduce inflation, with a temporary measure planned for the period between 1 January and 30 June 2023.

In the report published in March 2023 (Report):

Given the energy crisis resulting from the war in Ukraine, many of the planned environmental reforms are not considered appropriate at this time, such as the specific reform relating to the different taxation of diesel and petrol.

However, several measures have been adopted in line with environmental objectives:

Firstly, two new taxes have been approved and came into force on 1 January 2023: the special tax on non-reusable plastic packaging is aimed at waste prevention, and the tax on waste disposal in landfills, incineration and co-incineration is a key mechanism for advancing the circular economy and achieving the objectives of preparation for reuse and recycling of waste.

The tax on fluorinated greenhouse gases has also been modified. It not only aims to ensure effective control of fluorinated greenhouse gases, but also to simplify, as far as possible, compliance with formal obligations and, therefore, its management, both by taxpayers and by the tax authorities. In addition, an end date has been set for some exemptions currently in force because less polluting alternatives already exist and the sector must make an effort to adapt.

In the report published in March 2022 (Report):

Specifically, in relation to SOCIMIs, their undistributed profits are taxed at 15 per cent as dividends, thus providing a further incentive for all profits to be distributed to shareholders; and in relation to SICAVs, new objective requirements are established and the AEAT is granted the power to verify compliance.

In the subsequent update of December 2022 (Annex):

Specifically, in relation to SOCIMIs, their undistributed profits are taxed at 15 per cent as dividends, thus providing a further incentive for all profits obtained to be distributed to shareholders; and in relation to SICAVs, new objective requirements are established and the AEAT is given the power to verify compliance. With regard to SICAVs, section 4(a) of Law 27/2014 of 27 November on Corporation Tax was amended by Article 1.2 of Law 11/2021 of 9 July, on measures to prevent and combat tax fraud, transposing Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market, amending various tax rules and regulating gambling.

https://www.boe.es/buscar/act.php?id=BOE-A-2021-11473#ap

With regard to SOCIMIs, the amendment was introduced by adding a new section 4 to Article 9 of Law 11/2009 of 26 October, regulating Listed Real Estate Investment Companies, through final provision 2.1 of Law 11/2021 of 9 July. https://www.boe.es/buscar/act.php?id=BOE-A-2021-11473#df-2