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Spanish Lawmakers Sign Off On Income Tax Reforms

by Ulrika Lomas, Tax-News.com, Brussels

25 November 2014


Spain's comprehensive tax reforms plans have been approved by the country's legislature, and the legislation will be published shortly in the Official Gazette.

In a final debate, Congress endorsed the various changes on November 20, 2014, after amendments from the Senate. The legislation, which will enter into force from January 1, 2015, will lower the corporate income tax rate from 30 percent to 28 percent from next year. It will be further reduced to 25 percent in 2016. A reduced rate of 15 percent will apply to companies formed in 2013 or 2014, for two years.

The package will also reform the personal income tax regime under five bands, down from seven currently, reducing the tax burden on low-income taxpayers by about a fifth.

The minimum personal income tax rate is to fall to 24.75 percent in 2015 and to 19 percent in 2016. The top marginal tax rate, which will be 47 percent next year, will fall to 45 percent in 2016 and will be levied on income in excess of EUR60,000 (USD74,500), down significantly from EUR300,000 currently. The tax-exempt threshold will rise to EUR12,000.

Tax on savings income of up to EUR6,000 will fall from 21 percent to 20 percent in 2015 and to 19 percent in 2016. Savings income of up to EUR50,000 will be taxed at a 22 percent rate in 2015 and a 21 percent rate in 2016. Above this threshold, the applicable rate will fall from 24 percent next year to 23 percent in 2016. These rates are also to newly apply to capital gains, removing rates more than twice as high on gains from short-term holdings.

TAGS: tax | corporation tax | tax thresholds | legislation | tax rates | Spain | tax reform | individual income tax | Tax

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