Thursday 10/28/21
TAXES

Tax changes included in the Spanish budget for 2022

There are three tax changes that will come into effect in 2022 and will affect large companies, the self-employed and pension plans
Minister of Finance Maria Jesus Montero presented the draft budget of the State for 2022 in Parliament. Photo: Eva Ercolanese/PSOE.
Minister of Finance Maria Jesus Montero presented the draft budget for 2022 in Parliament. Photo: Eva Ercolanese/PSOE.

The Spanish government presented the 2022 draft budget in Parliament on Wednesday.

The government said in a press release that this is a draft budget "for a fair recovery", which aims to "consolidate the economic and social recovery after the pandemic."

The budget project includes this time the injection of 27,633 million euros from European funds for post-Covid recovery.

In an institutional act, the Minister of Finance, María Jesús Montero, handed over the budget project to the president of the lower house of Parliament, Meritxell Batet. Now, its parliamentary process begins.

Later, Montero detailed in a press conference the main lines of the budget project, which include various tax changes. Once the law is debated and approved by Parliament, they will enter into force in 2022.

The tax changes are mainly three:

1.- Corporation tax

The first novelty will be the establishment of a minimum rate of 15% in Corporation Tax for companies with a turnover of more than 20 million euros or that constitute a consolidated group.

In this sense, Minister Montero celebrated the agreement reached last week in Paris by 136 countries to promote a global minimum tax of 15% in Corporation Tax and end the unfair competition suffered by SMEs compared to large corporations.

As an ingredient to achieve a minimum effective taxation of 15% also for companies that rent homes, there will be a reduction in the income bonus, which drops from 85% to 40%. This measure is included in the announced future Housing Law.

With these changes in the Corporation Tax, the State expects to increase tax revenue by 421 million euros.

2.- Pension plans

Second, the budget includes the limitation to 1,500 euros in the reduction for contributions to pension plans in personal income tax (IRPF, in its Spanish acronym), from the 2,000 euros in force now.

Also in the chapter on proactive savings, the tax incentive for employment plans is reinforced: the limit for the company rises to 8,500 euros, while the joint threshold (company and worker) remains at 10,000 euros.

In addition, as a novelty, the worker is given the option of matching his contribution to that of the company, without the sum of the two exceeding 8,500 euros.

3.- Self-employed

Third, the current limits that allow taxation by the module system ('sistema de módulos') in Income Tax and VAT are extended. The government says this measure is adopted for the benefit of the self-employed.

According to the government forecast, 62,905 taxpayers of personal income tax and 73,935 VAT payers will benefit from this. They will save 114.7 million euros, says the government.

Finally, a specific heading will be incorporated into the Tax on Economic Activities for journalists and other information and communication professionals, in response to the request of professional associations.

Fight against tax fraud

The head of the Treasury also highlighted the government's commitment to the fight against fraud and tax evasion.

In that sense, Montero explained that the Spanish Tax Agency (AEAT) will have a budget close to 1,700 million euros, the highest registered to date.

In addition, the Agency's staff will be reinforced with 1,043 more workers.

Comments