HEALTHPLAN MAGAZINE

Spain’s government has announced that those on lower incomes are to receive a reduction in the amount of tax they pay.

The announcement was made by Minister of Finance María Jesús Montero (pictured) on Thursday, who said that those earning up to 21,000 euros would be better off as a result of the new fiscal policy.

During a press conference, Montero said that around 50% of workers would benefit from the reduction in personal income tax (IRPF), with Spain’s median salary being 21,000 euros. In total, 1,881 million euros would be saved.

Single taxpayers without children will also be exempt from any contributions until they earn 15,000 euros, increased from 14,000.

Those with children will have their threshold increased from 18,000 to 19,000 euros.

“Since we began governing, we have been working to make our fiscal system more progressive, efficient and strong enough to support social justice,” Montero said.

However, it wasn’t such good news for Spain’s wealthiest individuals with the introduction of a new temporary wealth tax and an increase in the capital gains tax rate.

It followed an announcement last week from the government that said it would create a temporary tax for the country’s richest but didn’t elaborate any further.

New 'solidarity tax' for those earning more than 3 million euros

It wasn’t good news for around 23,000 people with the introduction of a new ‘Solidarity Tax’ which will target the country’s wealthiest citizens.

Under the initiative, those with a net wealth of more than 3 million will be hit with three new thresholds. Assets of between 3 and 5 million euros will be taxed at the rate of 1.7%. Assets of between 5 and 10 million will be taxed at 2.1% with assets greater than 10 million taxed at a rate of 3.5%.

The measure will run for the years 2023 and 2024 with double taxation avoided as the tax will be deductible under the new income tax rules.

The government projects that the move would generate around 1.5 billion euros in tax revenue.

Capital Gains Tax Will Be Increased

Capital gains tax would also be increased under the new measures with the tax rate for capital gains of more than 200,000 euros going from 26% to 27%.

Any gains of more than 300,000 euros would be taxed at a rate of 28%.

The government hopes to raise around 204 million euros with 17,814 taxpayers affected.

Self Employed deductible expenses to be increased

Spain's army of self-employed autonomous workers will also benefit from a reduction in the deductible expenses which are difficult to justify under the simplified direct estimation regime.

These will be increased from 5% to 7%, affecting 577,000 of the country's self-employed saving them a combined 184 million euros.

The announcement follows a number of similar moves by the country’s regional governments last week.

The Andalusia region said that they would be scrapping wealth tax from September in an attempt to attract more high-income earners.

This was followed soon after by the regional government of Murcia which said it would be slashing income tax by 4.1% and then the Valencian government who said they would be reducing the income tax for those earning less than 60,000 euros.

The measures aim to combat the surge in inflation which has been caused due to the conflict in Ukraine.

In August, the country’s rate of inflation hit 10.5% and although it eased in September to 9%, it is still high and putting a huge strain on household budgets.

In recent weeks the government has rolled out a number of inflation-busting initiatives to help families and businesses weather the financial storm. These included cutting sales tax on natural gas from 21% to 5%, subsidising petrol prices and introducing free public transport.

Source

https://www.20minutos.es/noticia/5064816/0/todas-las-medidas-fiscales-anunciadas-por-el-gobierno-impuesto-a-los-ricos-minimo-exento-y-reduccion-del-irpf-al-50-de-trabajadores/
https://www.thelocal.es/20220930/spain-to-slap-new-tax-on-millionaires-whilst-cutting-taxes-for-low-income-earners/

Image Credit: La Moncloa