Tax Changes Introduced by Law 7/2024 of 20 December
Below we set out the most significant amendments introduced by Law 7/2024 of 20 December, which we consider relevant to our clients:
Personal Income Tax (IRPF) - Personal Income Tax
Increase in the Marginal Tax Rate on Savings Income:
A two-percentage-point increase has been introduced in the marginal tax rate applicable to savings income above €300,000. As a result, income exceeding €300,000 will be subject to a tax rate of 30%.
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Royal Decree-Law 9/2024 of 23 December introduces a range of urgent measures in the areas of economic policy, taxation, transport and Social Security, with the following key tax changes:
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Personal Income Tax (IRPF):
From 1 January 2025, the threshold triggering an obligation to file a tax return where income is received from a second or additional payer has been raised to €2,500 (previously €1,500).
- The tax deductions for energy efficiency improvements to residential properties, and for the purchase of electric vehicles and charging points, have been extended until 31 December 2025.
- From 1 January 2024, an imputed income rate of 1.1% applies to properties whose cadastral values (the Spanish rateable values used as the tax base for property-related taxes) were revised from 2012 onwards.
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Flat-Rate Assessment Scheme under Personal Income Tax (IRPF) and VAT:
- The thresholds for applying the flat-rate assessment (objective estimation) regime under Personal Income Tax (IRPF) and the simplified VAT regime have been extended until 2025, with exceptions for agricultural, livestock and forestry activities.
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VAT:
- Measures have been introduced relating to tax warehouses for fuel products.
- Measures have been introduced relating to tax warehouses for fuel products.
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Corporate Income Tax:
- The accelerated depreciation (free amortisation) regime for renewable energy investments has been extended until 1 January 2025.
- The accelerated depreciation (free amortisation) regime for renewable energy investments has been extended until 1 January 2025.
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Other Taxes:
- The entry into force of the tax on electronic cigarette liquids and tobacco-related products is delayed until 1 April 2025.
- The taxes on interest margins and commissions of financial institutions are amended with effect from 1 January 2024.
- A tax regime is established for the finals of the 2024 UEFA Women's Champions League and the 2025 UEFA Europa League.
Royal Decree-Law 10/2024, of 23 December, introduces a new temporary energy levy applicable to certain key companies in the energy sector in 2025. This levy is classified as a non-tax public patrimonial charge.
Companies subject to this levy may reduce the amount payable by making strategic investments through a non-distributable reserve, on the terms set out in the applicable regulations.
The payment obligation arises on 1 January 2025, with full payment due within the first 20 calendar days of September 2025. In addition, an advance payment of 50% of the levy is required, to be offset against the final settlement and paid within the first 20 calendar days of June 2025.
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OTHER MATTERS TO CONSIDER
Exemption for Donations to Workers Affected by the DANA
An exemption is established under Personal Income Tax (IRPF) for donations made by companies to workers affected by the DANA (the devastating flash flooding that struck parts of Spain in late 2024).
Reduction for Income from Artistic Activities:
A reduction of 30% will apply to the excess of gross income derived from exceptional artistic activities, specifically those relating to the creation of literary, artistic or scientific works, and to the special employment relationship of artists working in the performing arts, audiovisual sector and music industry.
Reduction for Economic Activities Related to the Arts:
A 30% reduction is introduced on the net income from economic activities that do not qualify for the reduction set out in Article 32.1 of the Personal Income Tax Act (LIRPF), and that relate to activities carried out by artists or professional services connected to the arts.
Changes to Refund Processing Procedures:
Corporate Income Tax (IS)
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Reduced Tax Rates for Micro-Enterprises and Small and Medium-Sized Enterprises:
- Micro-enterprises (turnover below €1 million): The tax rate is reduced from 23% to 21% on the first €50,000 of the taxable base, and to 22% on the remainder.
- Small and Medium-Sized Enterprises (ERD): The tax rate is reduced from 25% to 24%.
- For the 2026 tax year, further reductions will apply: micro-enterprises will be taxed at 19% on the first €50,000 and at 21% on the remainder, and ERDs at 23%.
- For 2027, ERDs will be taxed at 22%, and for 2028, at 21%.
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Non-Deductibility of Expenses Related to the Top-Up Tax:
Expenses arising from the accounting treatment of the Top-Up Tax (Impuesto Complementario) will not be tax-deductible. -
Increased Reduction for the Capitalisation Reserve:
The reduction to the taxable base for the "capitalisation reserve" is increased in certain cases, both on a general basis and in scenarios involving an increase in headcount. -
Minimum Net Tax Liability for Entities with a Net Business Turnover Below €1 Million:
For entities whose net business turnover in the immediately preceding tax period is below €1 million, the percentage applicable to the minimum net tax liability shall be calculated by multiplying the scale provided for in Article 29 of Law 27/2014 by 15/25.
Amendment to the Tax Base for Companies with a Turnover Exceeding €20 Million:
For taxpayers whose net turnover is at least €20 million in the 12 months prior to the start of the tax period, new limits will apply to allowances for impairment of receivables and assets.
- 50% where the net amount is between €20 million and €60 million.
- 25% where the net amount exceeds €60 million.
Amendment to the International Double Taxation Deduction:
The international double taxation deduction is capped at no more than 50% of the gross tax liability.
Extension of Temporary Measures on the Determination of the Tax Base:
The temporary measures under the tax consolidation regime are extended for the financial years 2024 and 2025.
VAT - Value Added Tax
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Amendments to VAT
Specific changes are introduced to the VAT rules applicable to petrol, diesel and biofuels. -
VAT Rate for Fermented Milk Products:
The VAT rate applicable to fermented milk products is amended.
Written by Sara Haiki
Tax and Accounting Specialist
This information is relevant for adjusting the tax strategies of our clients, and we recommend reviewing it carefully and applying the relevant changes to their tax returns and tax planning.
The tax amendments introduced by Law 7/2024 are of significant importance for our clients, both individuals and legal entities. We recommend reviewing the implications of these changes in detail and adjusting your tax planning accordingly. Should you have any questions or require further guidance, we are available to provide specialist assistance.
