The deal arranged by PSOE and Unidas Podemos last 30th December has provoked an agreement that both parties have called “Coalición Progresista. Un nuevo acuerdo para España”. This agreement includes, amongst others, the partial abolishment of the labour reform approved back in 2012, increase of Minimum Wages and a series of fiscal measures.
The main points of this agreement from a tax point of view are:
1/ Fight against fraud. It is intended to update the list of tax haven territories, eliminate fiscal amnesties and promote fraud prevention through Tax Office lists of debtors. Regarding cash payments, the limits will be stricter.
2/ Increase of control of “SICAV”. New requirements will have to be met in order to apply the reduced tax rate for this kind of entities, ensuring its nature of collective investment instrument. To do so, it will be establish a maximum capital amount per investor (including participation of related parties).
3/ Corporation Tax. Big corporations will be taxed at a minimum of 15%, increasable until 18% for financial entities and hydrocarbon companies. Dividends and capital gains related to participation on other entities will be reduced by 5%, and qualified as non tax deductible expenses. Small and Medium size companies (“PYMES”) will be taxed at 23% instead of 25%, as long as their annual turnover does not exceed one million euros.
4/ Personal Income Tax ( IRPF). Tax payers with rents above 130,000 euros will see their tax rate increased around two %, and the part exceeding 300,000 euros will be increased by 4%. For financial earnings above 140,000 euros, national tax rate will be 27% instead of 23%.
5/ Special regime of “SOCIMIS” will be reformed, applying a tax rate of 15% on retained profits.
6/ VAT. There will be a tax rate reduction in female hygiene products and veterinary services.
7/ New government also wants to approve new taxes such as: Tax on certain digital services, applicable to operations that currently are not taxed in the digital economy; Financial transactions Tax and/or Tax to punish certain behaviours on environmental issues.
Regardless of this agreement, none of the above mentioned measures has been approved yet but the increase of Minimum wages.