The Spanish Government has recently published a new tax reform, which includes reforms in Corporate Income Tax, Personal Income Tax and Non-Residents Income Tax.
The changes took effect from 1 January 2015.
In this article we will focus on the changes affecting individuals.
It is proposed that the general income tax rates for non-residents will be 24% for 2015.
Taxpayers under the Special Tax Regime for inbound assignees will be subject to the following tax rates as of 2015:
|Rate Bands||Tax rate in 2015||Tax rate from 2016|
|> 600,000 €||47%||45%|
Please note that this article does not discuss other proposed changes provided for in the draft law, such as those relating to the Corporate Income Tax – although, it is important to note the government aims to lower corporation tax rates from 30 percent to 28 percent in 2015 and to 25 percent in 2016.
The new companies set up in 2015 will have a reduced Corporation tax for two years of 15%.The New companies will have reduced corporation tax until 15% the first two years, if they maintain some requirements investment regarding employees and turn over.
|Size of the company||2015||2016|
|New companies 2015||15%||15%|
|Small companies < 10,000,000 €||25%||25%|
|Big companies > 10,000,000 €||28%||25%|
The income tax rate is reduced from 27% to 24% in 2015 and to 23% in 2016. Savings income is increased from 24,000 EUR to 60,000 EUR
|Savings (Investment Income and Capital Gains) rate bands||Tax rate in 2015||Tax rate from 2016 onwards|
|Up to 6,000 €||22%||21%|
|Up to 50,000 €||24%||23%|
1) New withholding percentages for Self Employees will be established for work income as follows:
2) New withholding percentages for renting, now is 21%, in 2015 will be 20% and in 2016 19%.
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.
With regards to Personal Income Tax, one of the most important measures is that the tax reform lightens the tax burden, first by reducing the number of tax brackets from seven to five; the minimum tax rate is also reduced from 24.75% to 20% in 2015 and 19% in 2016 and the maximum tax rate is reduced from 52% to 47% in 2015 and 45% in 2016. Moreover, taxpayers earning less than 12,000 euros per year will be exempted of tax as per January 1st 2015
The most important change this time was, the administrator´s salary, they have been paid by payslips every month until now. After the change they need also to be register in the Tax Office as a self employee and they will start invoicing after 1st January and submitting quarterly taxes every quarter, charging IVA and IRPF in every invoice.
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