Tax innovations contained in the Draft Law on the General State Budget for 2019

A series of tax measures affecting a number of taxes are included in the draft General State Budget Law for 2019. Below, we describe how these measures affect the following taxes:

Corporate Income Tax

With effect from the tax periods starting on or after 1 January 2019 that have not ended with the entry into force of this law, the following new features are introduced

• A limitation of 95% of the exemption on dividends and positive income derived from the transfer of securities representing the equity of entities resident and non-resident in Spanish territory is established.
• It is established that neither domestic dividends nor income derived from the transfer will be eliminated with respect to a tax group entity to which the exemption on dividends and income derived from the transfer of securities representing the equity of entities resident and non-resident in Spanish territory applies.
• A minimum tax regime is included which establishes that the liquid quota (total quota – allowances and deductions) cannot be less than the result of applying 15% to the positive tax base, for the following cases:
  • Taxpayers whose net turnover is at least 20 million euros during the 12 months prior to the start of the tax period.
  • Taxpayers who pay taxes under the tax consolidation regime.
• The tax rate for entities whose net turnover for the previous tax period is less than 1 million euros will be 23%.
• The method of calculating the amount of the instalment payment determined on the basis of the result is modified. It is established that it will be the result of applying to the base the percentage resulting from multiplying the tax rate rounded up by 19/20. Therefore, the instalment payment will be 24% and 29% depending on whether the applicable tax rate is 25% or 30%.
• The minimum instalment payment is increased to 24% of accounting profit for entities whose net turnover in the twelve months prior to the start of the tax period is at least 10,000,000 euros.
• A new deduction is established for the promotion of gender equality for entities that increase the number of women on their Board of Directors when a series of requirements are met.

Value Added Tax

With effect from the entry into force of this law, the tax rates applicable to the following products will be reduced:

• Feminine hygiene products (sanitary towels, tampons and panty liners) are now taxed at a rate of 4%.
• Veterinary assistance services will be taxed at a rate of 10%.
• Books, newspapers and magazines, even when they are considered to be services provided by electronic means, will be taxed at a rate of 4%.

Personal Income Tax

With effect from the entry into force of the Law, measures will be introduced to increase taxation so that

• The general scale of the tax is modified so that taxpayers whose net base exceeds 130,000 euros will be taxed by two more percentage points, and four points from 300,000 euros.
• A new section is introduced in the 27% savings scale for taxpayers whose net worth exceeds 140,000 euros. It should be remembered that this scale is applicable to capital income and capital gains derived from the transfer of assets.
• Changes are made to the scale of withholdings and payments on account applicable to recipients of employment income.
• The tax rates applicable to workers posted in Spanish territory are increased so that the rate applicable will be 49% when the taxable base exceeds 600,000 euros and 27% for the savings tranche when it exceeds 140,000 euros.

Wealth Tax

With effect from the entry into force of this law, the tax rate applicable to the last instalment of the table is increased so that the applicable tax rate will be 3.5% when the taxable base exceeds 10,695,996.06 euros.

In this summary you will find the main novelties introduced by the General State Budget Bill for 2019 in the tax field. However, this Bill is currently being processed and may be modified or not approved in Parliament, so we will inform you about possible developments in this regard.