Law 31/2022, of 23 December, on the General State Budget 2023, introduces changes mainly to Personal Income Tax (increase in the reduction for obtaining income for workers and pensioners, increase in the reduction for obtaining income from the activity and in the percentage of expenses that are difficult to justify in the simplified direct assessment system, general reduction in the net income calculated by the objective assessment method and extension of the limits excluding the method, increase in the tax rates for savings…) and to Corporation Tax (reduction in the tax rate for very small entities -net turnover of less than 1 million euros-, accelerated depreciation of certain vehicles…). ) and Corporate Income Tax (reduction of the tax rate for very small companies -net turnover of less than 1 million euros-, accelerated depreciation of certain vehicles)…
The Official State Gazette of 24 December 2022 published Law 31/2022, of 23 December, on the General State Budget for 2023 (hereinafter, LPGE 2023), in force on 1 January 2023, which includes various tax measures, some of them of some significance.
In income tax, the reduction for earned income and the lower limit of the obligation to declare that applies when, among other cases, earned income is received from more than one payer is increased. It also establishes a 10 per cent reduction in net income, in 2023, for taxpayers who determine it in objective assessment; it increases the percentage applied to expenses that are difficult to justify for entrepreneurs and professionals in simplified direct assessment; it regulates new limits on contributions to pension plans; and it establishes two more brackets in the savings rate for income above €200,000. Both in the objective assessment regime in personal income tax and in the special simplified and agriculture, livestock and fisheries VAT regimes, the limits established for 2022 are extended.
With regard to corporate income tax, a reduced tax rate of 23% is established for companies with a turnover of less than €1,000,000 and which are not property-owning entities, and accelerated depreciation of certain vehicles.
In VAT, there are a number of changes, such as the reduction from 10% to 4% of the rate applicable to the supply of sanitary towels, tampons and condoms, the modification of the special rule of effective use in relation to the taxation of services and the modification of the special mechanism for the reversal of the taxable person in certain cases.
The updating coefficients for determining the taxable base of the Tax on the Increase in Value of Urban Land are also adapted and a special regime is established for the Balearic Islands.
And finally, we can highlight a new regulation of deferrals and instalments of debts and state tax penalties in pre-insolvency situations by the AEAT.
Below we will see the main tax measures contained in the LPGE 2023.
- PERSONAL INCOME TAX
1.1 Reduction for obtaining earned income (with effect from 1 January 2023).
The reduction for taxpayers with earned income is increased from 16,825 to 19,747.5 euros. Likewise, the amounts that reduce the net income are increased.
Taxpayers with net earned income of less than €19,747.5 (previously €16,825), provided that they do not have income, excluding exempt income, other than earned income of more than €6,500, will reduce their net earned income by the following amounts:
- 6,498 (previously €5,565) if the net income from work is equal to or less than €14,047.5 (previously €13,115).
- 6,498 (previously €5,5656) minus the result of multiplying by 1.14 (previously 1.5) the difference between the earned income and €14,047.5 if the net earned income is between €14,047.5 and €19,747.5.
1.2 Obligation to declare: Increase in the amount of total income from work above which it is compulsory to declare the tax.
The lower threshold for the obligation not to file a tax return has been raised for recipients of earned income. Specifically, taxpayers who receive earned income from more than one payer (and in other very specific cases, as before) are not obliged to file a self-assessment tax return if the sum of such income does not exceed €15,000 (previously €14,000).
1.3 Withholdings on earned income
Withholdings and payments on account to be made on income from work paid or credited during the month of January 2023, corresponding to that month, and to which the general withholding procedure is applicable, must be made in accordance with the regulations in force on 31 December 2022.
For income paid or credited as from 1 February 2023, provided that it is not income corresponding to the month of January, the payer must calculate the withholding rate taking into account the regulations in force as from 1 January 2023, and regularise it in the first income from work paid or credited.
1.4 Reduction for obtaining income under simplified direct estimation (with effect from 1 January 2023)
The reduction applicable to economically dependent self-employed workers is increased:
When the net income from economic activities is less than €19,747.5 (previously €14,450), provided that they do not have income, excluding exempt income, other than income from economic activities in excess of €6,500:
- 6,498 (previously €3,700) if the net income from economic activities is equal to or less than €14,047.5 (previously €11,250).
- 6,498 (previously €3,700) minus the result of multiplying by 1.14 (previously 1.15625) the difference between the income from economic activities and €14,047.5 (previously €11,250) if the net income from economic activities is between €14,047.5 and €19,747.5 (previously €11,250 and €14,450, respectively).
1.5 Difficult-to-justify expenses in simplified direct assessment (with effect from 1 January 2023)
The deduction percentage for all deductible provisions and expenses that are difficult to justify will be 7% (previously 5%). It should be remembered that the deduction cannot exceed €2,000, and this absolute limit remains unchanged (art. 30 of the Personal Income Tax Regulations).
1.6. Taxpayers in objective assessment (with effect from 1 January 2023)
The general reduction applicable to the net module yield obtained in the 2023 tax period is increased to 10%.
Taxpayers may reduce the net module yield obtained in 2023 by 10%, in the manner established in the Order approving the signs, indices or modules for that year.
The exclusion limits for the objective assessment method are extended for the financial years 2016, 2017, 2018, 2019, 2020, 2021, 2022 and 2023. Specifically, the amounts of €150,000 and €75,000 are set at €250,000 and €125,000, respectively. Likewise, for these financial years, the amount of €150,000 is fixed at €250,000.
1.7 Limits of reduction in the taxable base of contributions to social welfare systems (with effect from 1 January 2023).
The absolute contribution limit of €1,500 will be increased by €8,500, provided that this increase comes from company contributions, or from contributions by the worker to the same social welfare instrument for an amount equal to or less than the amounts resulting from the following table depending on the annual amount of the company contribution:
Annual amount of the contribution >> Maximum worker’s contribution
Equal to or less than EUR 500. >> The result of multiplying the employer’s contribution by 2.5.
Between 500.01 and 1,500 euros. >> 1,250 euros, plus the result of multiplying the difference between the employer’s contribution and 500 euros by 0.25.
More than 1,500 euros. >> The result of multiplying the company contribution by 1.
Therefore, the calculation of the maximum employee contribution is only modified when the company contribution is between €500.01 and €1,500.
However, in any case, the multiplier 1 will be applied when the worker obtains in the financial year full earned income of more than €60,000 from the company making the contribution, for which purpose the company must inform the management or insurance company of the social security instrument that this circumstance does not apply.
It is specified that the limit of €4,250 previously established for contributions by the self-employed to simplified employment plans and for contributions to plans of which the self-employed person is the promoter also applies to contributions to sectoral pension plans.
In line with this reduction, the financial limits for contributions and contributions to social welfare systems are modified.
1.8 Savings tax rates (with effect from 1 January 2023).
New tax rates are regulated, adding two brackets to the taxable base between €200,000 and €300,000 with a rate of 27% (previously 26%) and from €300,000 onwards, with a rate of 28% (previously 26%).
|Savings tax base||Full quota||Remaining savings tax base||Applicable type|
|Up to EUR||Euros||Up to EUR||Percentage|
Persons of Spanish nationality who accredit a new residence in a country or territory considered as a tax haven maintain their status as taxpayers of the tax for 5 years. These taxpayers, plus nationals who have their habitual residence abroad due to their status as members of diplomatic missions, consular offices, etc., apply the same savings rate.
1.9 Maternity deduction (with effect from 1 January 2023)
With effect from 1 January 2023, the following new features have been introduced in the maternity tax credit:
This deduction is not only going to be applicable to those women with children under 3 years of age entitled to the application of the minimum deduction for descendants who are self-employed or employed and registered with the Social Security or mutual society, but is also extended to those who:
- at the time of the child’s birth are in receipt of contributory or welfare benefits under the unemployment protection system; or
- who at that time or at any time thereafter are registered in the corresponding social security or mutual insurance scheme with at least 30 days of contributions.
1.10 Reduction of withholding tax rates on income from intellectual property (with effect from 1 January 2023)
With effect from 1 January 2023 and valid indefinitely, the withholding percentages for this income are set at the following rates:
1.10.1 Income from work derived from the production of literary, artistic or scientific works in which the right to exploit them is assigned.
The withholding percentage is reduced from 15% to 7%.
- That the volume of such full income corresponding to the immediately preceding financial year be less than 15,000 euros, and
- It represents more than 75% of the sum of the total income from economic activities and work obtained by the taxpayer in the said financial year.
- The need to inform the payer of the existence of these circumstances.
1.10.2. Income from intellectual property, irrespective of its qualification
The withholding rate is reduced from 19% to 15%.
- Imputation of real estate income (with effect from 1 January 2023)
With effect from 1 January 2023 and valid indefinitely, it is specified that, during the 2023 tax period, the income quantification percentage of 1.1% is applicable to properties in municipalities whose cadastral values have been revised, modified or determined by means of a general collective valuation procedure effective from 1 January 2012 (previously it was when they had been revised and entered into force in the ten previous tax periods).
- New deduction for habitual and effective residence on the island of La Palma during the 2022 and 2023 tax periods.
With effect from 1 January 2023 and indefinitely in force, a new deduction is created for taxpayers who are habitually and effectively resident on the island of La Palma. The deduction is applicable, in the 2022 and 2023 tax periods, under the same terms and conditions as the deduction for income obtained in Ceuta or Melilla for taxpayers resident in Ceuta or Melilla provided for in article 68.4.1 of the LIRPF.
- CORPORATION TAX
2.1 Reduced tax rates (effective for tax periods beginning on or after 1 January 2023)
The tax rate is reduced from 25% to 23% for entities whose net turnover (INCN) for the immediately preceding tax period is less than €1,000,000 and which are not considered to be an asset-holding entity.
2.2 Accelerated depreciation of certain vehicles for corporate income tax purposes
Depreciation is allowed on the basis of the coefficient resulting from multiplying by 2 the maximum straight-line depreciation coefficient provided for in the officially approved depreciation tables for investments in new FCVs, FCHVs, BEVs, REEVs or PHEVs (as defined in Annex II of the General Vehicle Regulations), provided that:
- Are engaged in economic activities.
- They enter into operation in the tax periods beginning in the years 2023, 2024 and 2025.
- VALUE ADDED TAX (VAT)
3.1 Exemption scheme for transactions carried out by armed forces (effective 1 July 2022)
A system of exemptions similar to that already in place for the armed forces of any State party to the North Atlantic Treaty is established. Intra-Community acquisitions of goods, exports, supplies of services and imports of goods made by the armed forces of any Member State for the use of those forces or of civilian staff in their service, provided that those forces are engaged in a defence effort undertaken for the purpose of carrying out an activity of the Union in the field of the common security and defence policy, are included as exempt transactions.
3.2 Place of performance of services. Special rules (effects from the entry into force of the Budget Law)
The application of the special rule of effective use in the provision of services between entrepreneurs in those sectors and activities that generate the right to deduction is abolished, while its application is maintained in sectors that do not generate such right, such as the financial and insurance sectors, and its application is extended to the provision of intangible services to final consumers not established in the European Union, when it is established that their consumption or effective exploitation is carried out in the territory where the tax is applicable.
Furthermore, in order to avoid situations of tax evasion or avoidance and to ensure competition in this market, this clause will apply to the hiring of means of transport.
3.3 Harmonisation and adaptation of VAT regulations to customs regulations (effective from the entry into force of the Budget Law)
Several precepts of the Tax Law are updated with the aim of harmonising and adapting their content to Community customs regulations.
Specifically, those referring to the taxable import of goods, operations assimilated to imports of goods, exemptions in exports of goods, exemptions in operations assimilated to exports, exemptions relating to temporary storage situations and other situations, exemptions relating to customs and fiscal regimes, the taxable base for imports of goods and the settlement of the tax on imports.
3.4 Reversal of the taxable person (effects from the entry into force of the Budget Law)
When transactions are carried out by persons or entities not established in the territory of application of the tax, the special reverse charge mechanism is generally applied. However, there are exceptions to the application of this special mechanism. These exceptions include the provision of property leasing services that are subject to and not exempt from tax and are carried out by persons or entities not established in the territory where the tax is levied. In this way, it is made easier for them to benefit from the general deduction and refund system established in the Tax Law, given that in certain circumstances they had been excluded from the refund system for non-established persons. In this way, the neutrality of the tax is guaranteed and the administrative burden of obtaining the refund is reduced.
In the same vein, the special reverse charge mechanism is also excluded from the application of the special mechanism for the provision of intermediation services in the leasing of real estate by non-established entrepreneurs or professionals.
In addition, changes are made to the regulation of the reverse charge mechanism, extending its application to supplies of waste and scrap plastic and textile materials, and the rules relating to the taxable person are amended so that the reverse charge rule applies to supplies of these waste and recovery materials.
3.5 Electronic commerce (effects from the entry into force of the Budget Law)
A series of technical adjustments are made in order, on the one hand, to define more precisely the rules relating to the place where intra-Community distance sales of goods are made and the calculation of the threshold which allows tax to continue to be paid at source on these transactions in the case of traders or professionals who only exceptionally carry out e-commerce transactions and, on the other hand, in relation to this threshold, to specify that, for the application of the corresponding threshold, the supplier must be established only in one Member State and the goods must be sent exclusively from that Member State.
3.6 Recovery of VAT accrued on uncollectible receivables (effects from the entry into force of the Budget Law)
The tax law incorporates the administrative doctrine allowing the modification of the taxable amount in the case of uncollectible debts as a result of insolvency proceedings declared by a court in another Member State.
In addition, the minimum amount of the taxable amount of the transaction is reduced when the defaulting recipient is a final consumer (from €300 to €50), the procedure is made more flexible by incorporating the possibility of replacing the prior judicial claim or notarial requirement to the debtor with any other means that reliably accredits the claim for collection from the debtor, and the period for recovering VAT from the time the credit is declared uncollectible is extended to 6 months. This last measure is accompanied by a transitional regime so that all VAT taxable persons whose deadline for modification had not expired on the date of entry into force of the Law may avail themselves of the new 6-month period.
3.7 Tax rates (effects from the entry into force of the Budget Law)
Certain goods that have hitherto been taxed at the reduced rate of 10 per cent are now taxed at the reduced rate of 4 per cent. These are tampons, sanitary towels and panty liners, essential products inherent to the female condition, as well as condoms and other non-medicated contraceptives.
3.8 Limits for the application of the simplified scheme and the special scheme for agriculture, livestock farming and fisheries in 2023 (with effect from 1 January 2023)
The limits for the application of the simplified scheme and the special scheme for agriculture, livestock farming and fishing are extended for a further year, so that the limit of €250,000 of income in the previous year and the amount of all acquisitions and imports of goods and services in the previous year will be maintained.
- TAX ON PROPERTY TRANSFERS AND DOCUMENTED LEGAL ACTS (ITP AND AJD)
4.1 Scale for transfers and rehabilitations of greatness and noble titles
With effect from 1 January 2023, the amounts of the scale (regulated in article 43 of the revised text of the ITP and AJD Law), which will be applied from the entry into force of this law, are updated to 2%.
4.2 Property loans to persons with a degree of dependency
Real estate credits, granted in accordance with Law 5/2019, of 15 March, regulating real estate credit contracts, to those who have an administratively declared degree of dependency in accordance with Law 39/2006, of 14 December, on the Promotion of Personal Autonomy and Care for people in a situation of dependency, will be exempt from AJD. To this end, the following requirements must be met simultaneously:
- That the loans are secured by a real right of antichresis, the amount of which is mainly intended to finance the cost of caring for a dependent person.
- The secured property must be intended for the rental market.
The deed must state the purpose of the credit and the borrower’s commitment to use the funds received to meet mainly the costs of stay in an old people’s home or other home care costs, in addition to the commitment to use the dwelling encumbered with antichresis for the rental market.
The same regime shall apply to the cancellation of claims secured by antichresis that meet the requirements of the preceding paragraph.
- LOCAL TAXES
5.1 Tax on Economic Activities. IAE (With effect for tax periods commencing as from 1 January 2023)
Group 761 of grouping 76 of section one of the Tax Rates “Telephone services” is modified:
- Minimum municipal fee of €62.20 per 1,000 subscribers or fraction thereof or Provincial fee of €137.48 per 1,000 subscribers or fraction thereof.
- National fee of €137.48: For every 1,000 subscribers or fraction thereof.
- For the purposes of calculating subscribers, all customers of each fixed or mobile telephony operator shall be considered, respectively.
A new Group 848 “Flexible office, coworking and business centre services” is added:
- Minimum municipal fee of €202.
- Provincial fee of €20,000.
- National fee of €35,000.
This group includes the services provided by flexible offices, coworking and business centres, which offer their clients (companies and professionals) the necessary infrastructure to carry out their activity: workspaces, offices and meeting, training or conference rooms, fully equipped, events, flexible or fixed workstations, communications service, videoconferencing and Internet connection, virtual offices, document and correspondence management, secretarial services, catering, office automation, etc.
The title of group 86 of the second section of the Tariffs is modified and renamed: “Liberal, artistic, literary and cultural professions”.
- A new Group 864. “Writers and scriptwriters” is added with a fee of: 115€.
- Add a new Group 869. “Other professionals related to artistic and cultural activities not classified in the third section” with a quota of: 115€.
- A new Group 889. “Mountain guides” is added with a quota of: 126€.
- A new Group 034 is added. “Composers, lyricists, arrangers and musical adapters” with a quota of: 100€.
5.2 Tax on the Increase in the Value of Urban Land (Effective from 1 January 2023)
The amounts of the maximum coefficients applicable to the value of land depending on the period of generation of the increase in value, for the determination of the tax base, are updated.
With effect from 1 January 2023, the maximum amounts of the coefficients to be applied to the value of the land at the time of accrual, according to the period of generation of the increase in value, will be as follows (article 107.4 of the revised text of the Ley Reguladora de las Haciendas Locales):
|Less than a year||0,15|
|20 years or more||0,45|
- EXCISE TAXES
6.1 Exemptions (with effect from 1 July 2022)
As with VAT, with effect from 1 July 2022, the Excise Duty Act is amended to transpose Council Directive (EU) 2019/2235 of 16 December 2019, as regards the defence effort within the Union framework, and specifically:
- The manufacture and importation of products subject to excise duty which are intended for the armed forces of any Member State other than Spain, for the use of those forces or of the civilian staff serving them, or for supplying their canteens or canteens, shall be exempt, provided that those forces are engaged in a defence effort undertaken for the purpose of carrying out an activity of the Union in the field of the common security and defence policy.
- Electricity supplied to the armed forces of any Member State other than Spain, for the use of those forces or of the civilian personnel in their service, or for supplying their messes or canteens, shall be exempt from the tax on electricity, provided that the said forces are engaged in a defence effort undertaken in pursuance of an activity of the Union in the field of the common security and defence policy.
- GENERAL TAX LAW
7.1. Social collaboration in the application of taxes: Confidentiality of data with tax implications
With effect from 1 January 2023 and indefinite validity, in relation to the data, reports or background information obtained by the Administration that may be transferred for the purpose of collaborating with public administrations in the fight against tax crime and against fraud in obtaining or receiving aid or subsidies from public or European Union funds, the amendment introduced by the LPGE 2023 clarifies that the appropriate measures to prevent, detect and correct fraud, corruption and conflicts of interest affecting the financial interests of the European Union are also included.
7.2. Deferrals and instalments of state tax debts and penalties in pre-insolvency situations by the AEAT
With effect from 1 January 2023 and indefinite validity, the deferrals and instalments of tax debts by the AEAT contained in the eleventh additional provision of Law 16/2022, of 5 September, reforming the revised text of the Insolvency Act, are re-regulated (without the previous wording having entered into force) to include penalties together with the debts that may be subject to these specific deferrals or instalments and to delimit their application to pre-insolvency situations.
- Debts and penalties that can be deferred or paid in instalments
In accordance with article 65 of the LGT and at the request of the taxpayer, it is now established that state tax debts and penalties that are in the voluntary or enforcement period and for whose collection management the AEAT is competent, may be deferred or paid in instalments, provided that the debtor:
- Has an economic-financial situation that temporarily prevents it from making payment within the established deadlines.
- Has notified the competent court of the opening of negotiations with its creditors (articles 585 or 690 TR of the Insolvency Act), and provided that the restructuring plan has not been formalised in a public instrument, nor the continuation plan approved, nor the insolvency proceedings declared, nor the special procedure for micro-enterprises opened.
- Terms for concession agreements
The concession agreements that are issued shall have terms with equal instalments and monthly maturity, but in no case may they exceed those regulated below:
A) Maximum period of 6 months, for those cases in which the circumstances foreseen in article 82.2.a) of the LGT are met, that is to say:
- That it is not possible to obtain a joint and several guarantee from a credit institution or mutual guarantee company or a surety insurance certificate or that the viability of the economic activity is seriously compromised.
- That the guarantee offered is sufficient
And in the case of inherited estates, community property and other entities which, lacking legal personality, constitute an economic unit or a separate estate liable to taxation (art. 35.4 LGT).
B) Maximum period of 12 months, for those cases in which the circumstances foreseen in Article 82.2.b) of the LGT are met, that is to say:
- Lacks sufficient assets to secure the debt
- The enforcement of its assets may substantially affect the maintenance of the productive capacity and the level of employment of the respective economic activity, or could lead to serious damage to the interests of the Treasury.
Or in the case of natural persons and the circumstances provided for in Article 82.2.a) of the LGT, i.e. the circumstances described in the 6-month period.
C) Maximum period of 24 months, for those cases in which the deferrals and instalments are secured by mortgage, pledge, personal and joint and several guarantee. Other guarantees may also be accepted provided that they are considered sufficient (art. 82.1, second and third paragraphs of the LGT).
D) Maximum period of 36 months for cases in which the deferrals and instalments are secured by a joint and several guarantee from a credit institution or mutual guarantee company or a surety insurance certificate (art. 82.1, first paragraph LGT).
The rest of the content of the eleventh additional provision (the exemption from the obligation to provide guarantees in certain deferrals and instalments, which until now was regulated in Order HAP/2178/2015, of 9 October, which raises the limit exempt from the obligation to provide a guarantee in requests for deferral or instalment to 30. 30,000 euros and establishing that the provisions of the LGT and its implementing regulations shall apply in all matters not expressly regulated in this provision) does not undergo any change in the text of the 2023 General Budget Law with respect to its original wording, but clearly refers to deferrals and instalments of state tax debts and penalties in pre-insolvency situations by the AEAT.
You can contact our office for any questions or clarification you may have in this regard.