The Balearic Islands are set to experience a transformation in its fiscal landscape in 2024, with several tax reforms now approved.
Here, we take a closer look at these changes and what they mean for those with financial ties to Mallorca, Minorca, Ibiza, Formentera and beyond.
Wealth Tax exemption revised
One of the main changes published in the Autonomous Community’s budget for 2024 is the revision of the Wealth Tax exemptions.
A new exemption threshold has been introduced, raising the Wealth Tax exemption limit to three million euros. Previously, it had been 700,000 euros (excluding the primary residence).
This change will have serious implications for revenue in the region; it’s expected to reduce overall annual tax revenue by about 60 million euros, marking a significant shift in the Balearic Islands’ fiscal approach.
Though the number of individuals paying Wealth Tax on the islands increased by 4.94% in 2021 (up by 8,903 people) – leaving the Balearic Islands fourth in the country’s ranking of wealthy residents, behind just the Valencian Community, Asturias and Aragon – the total declared only experienced a moderate rise (by 0.81%, totalling 3,990,544 euros).
Additional fiscal measures
Further fiscal measures announced in the 2024 Budget offer incentives, especially for young entrepreneurs and existing business owners. They include:
- Help for young business people: Initiatives have been included to encourage entrepreneurship among individuals under 35.
- Help for the self-employed: Additional support will be provided for self-employed individuals to help grow their businesses.
- Incentives for city-centre businesses: Subsidies will be available for businesses in city centres to offer free parking facilities to their customers.
Protection for landlords
The new budget also introduces protections for those renting out their properties. These include:
- Deduction on rental income: A new 30% deduction for income earned from long-term residential rentals has been introduced.
- Protection against squatters: An Office for the Defence of Victims of Illegal Occupation is being established, with a one-million-euro budget, to offer assistance and support.
- Secure Rental Plan: A three-million-euro plan is also being introduced to ensure that landlords receive their rent payments and are compensated for any property damages in case of non-payment by tenants.
Your tax and finance specialists in Spain
If you live in the Balearic Islands or have financial interests there, this 2024 Budget could have implications for you!
It marks a significant pivot in tax policy for the region, potentially impacting a wide range of stakeholders, from high-asset individuals to young entrepreneurs and property owners.
If you want to know how these impact you and your tax obligations, we can help!
Get in touch with us, and we’ll help ensure that you remain tax-compliant!