Tax Changes in Spain for 2015

Posted in: CAB Spain Team Blogs, Philip's Blog,
Author: Philip Carroll
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At the start of the summer 2014 the Government released the draft tax changes for 2015 and 2016. Since this time, these have been following the parliamentary process. Yesterday 20th November, the House of Representatives approved amendments incorporated by the Senate to tax reform which brings the parliamentary proceedings to an end.

Headlines

– Personal Allowances increased for the first time since 2007
– Allowances for family members increased
– Tax rates reduced from 1st January 2015 with further reductions announced for 2016

Income from Work & Pensions

– Earned income allowance, previously on a sliding scale between minimum of €2,652 and a maximum of €4,080, is fixed at €2,000 for all.
– In addition anyone with net work income less than €14,450, with net income from sources other than work of not more than €6,500 receive an allowance of between €0 and €3,700

Dividend Income

– The tax free allowance of €1,500 for dividend income is removed from the 1st January 2015, so all dividends will be liable to tax at investment rates.

Tax Relief on Rental Payments.

– The 10.05% relief on Rent paid previously available to anyone earning less than €24,107 p.a will not be available on leases signed after 31st December 2014.
– The 100% relief on rental income in respect of properties rented to tenants under 35 is not available from 1st January 2015. Relief at 60% is still available for all tenants, including under 35’s.

Capital Gains

– No differential between capital gains made in less than a year and over a year
– The coefficients (los coeficientes de actualización) applied to the purchases value to take into account inflation are abolished from 1st January 2015
– The offset coefficients (los coeficientes de abatimiento) that partially exempted gains on property purchased before 1994 upto2006 are retained, but are restricted to no more than €400,000, even if the value is higher. In addition this is a personal limit total, that can be applied to more than one transaction, until fully utilised.

Imputed Income

– The catastral revision date is changed to the previous 10 years from a fixed date of 1st January 1994. So the tax rate is only 1.1% if within 10 years of taxable date, otherwise it is 2%.

Self Employed

– The tax withheld from invoice payments currently 21% is reduced to 19% from 2015 and 18% from 2016
– For self employed workers earning less than €15,000 in the previous tax year, and this represents more than 75% of their income, a reduction to 15% for 2014 was already announced in July 2014.

– For newly registered Autonomos the tax withheld (IRPF retenciones) has been reduced from 9% to 7% for their first 3 years of business.

 

Rates & Allowances for 2015/2016

– Full details of the new rates for 2015 and 2016 are published in our Personal Taxation in Spain – Rates & Allowances

Note these changes apply from the 1st January 2015, so to income earned and taxed at source in Spain from that date onwards. For those receiving their income abroad (including pensions etc) either tax free, or taxed in another country, and making returns under a Double Taxation Agreement, the first declaration that will be taxed at the new rates will be 2016. The return submitted in 2015 for income earned in 2014 will be taxed at current rates.

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.

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