Important tax updates in Spain – what you need to know

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There’s some significant news from Spain regarding tax regulations that you might find interesting. On December 6, 2023, the Spanish Official State Gazette (BOE) published the Royal Decree 1008/2023.

This legal document brings notable changes to personal and corporate tax regulations in Spain, and it’s something that could affect many of us, from employees to entrepreneurs. Let’s break down what this means in simpler terms.

When Does It Start?

First things first: these changes came into effect the day after their publication, meaning from December 7, 2023. So, these are not distant changes but current realities.

Changes in Personal Income Tax (RIRPF):

  • Aligning with New Laws:

The decree modifies the RIRPF (Income Tax Regulations for Individuals)  to align with recent laws, like the General State Budget for 2023 and the Start-up Ecosystem Promotion Law. This is to make sure that the tax rules are up-to-date with the latest economic policies.

  • Key Updates:
    • For Start-up Employees: There’s now an exemption in place for income derived from receiving shares in start-ups. Previously, these shares had to be offered under the same conditions to all employees to qualify for tax exemptions, but this is no longer the case.
    • Maternity Deduction Expanded: The rules around maternity deductions have been broadened. This means more people can potentially benefit from this deduction, as previous limits based on contributions during the tax period have been removed.
    • Declaration Obligation Adjustments: The income threshold for declarations has been raised, particularly for those receiving income from multiple sources. This could mean fewer headaches for some when tax season comes around.
    • Retention Rate Reductions: There are now lower withholding rates for income from creating literary, artistic, or scientific work. This is good news for the creatives out there.
  • Special Tax Regime for Displaced Workers:

The decree defines new rules for entrepreneurs, highly skilled professionals, and their families under a special tax regime. This could be particularly interesting if you’re thinking of moving to Spain for work.

Updates in Corporate Income Tax (RIS):

  • Interest Exemption: Certain interests, like those received by central counterpart entities, are now exempt from certain tax obligations. This might seem a bit technical, but it’s a significant change for those in the finance sector.
  • Technical Tweaks: There are also some updates in the legal references to keep everything current with the latest financial laws.

Conclusion

These updates indicate Spain’s commitment to adapting its tax system to the modern economic landscape, especially beneficial for start-ups and entrepreneurs. Whether you’re an employee, a business owner, or thinking of moving to Spain, these changes could have implications for you.

Stay Informed and Prepared!

Navigating tax changes can be challenging, but staying informed is the first step to making the most of these updates. If you have questions or need assistance understanding how these changes impact you, don’t hesitate to contact us for an initial free general orientation. Remember, being proactive about tax planning can save you time and money in the long run.

Maria Luisa Castro

Director and Founder
María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English-speaking clients with legal problems in Spain. We’re here to help. Contact us today for a free, no-obligation, initial legal orientation.
 

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