Tax novelties foreseen in the Draft General State Budget Bill for 2023
On 13 October, the draft General State Budget Law for 2023 was presented for processing, which introduces a series of novelties in the field of taxation. In addition, other temporary measures are being considered that may affect individuals and companies.
The following is a summary of the main new developments that we believe should be highlighted in tax matters, with effect from 1 January 2023, for each of the following taxes:
Personal income tax
A series of amendments are envisaged in relation to earned income summarised below:
- The amount of the reduction for obtaining income from work is increased for taxpayers with a gross annual salary of up to 21,000 euros.
- The gross annual exempt salary is increased from the current 14,000 euros per year to 15,000 euros per year. In addition, the lower threshold for the obligation to declare income from work is increased to 15,000 euros per year.
In relation to the self-employed:
- The reduction applicable to economically dependent self-employed workers is increased by the same amounts.
- For the 2023 tax period, the percentage of deductible expenses for provisions and expenses that are difficult to justify is increased from 5% to 7% for self-employed workers who determine their net income in accordance with the simplified direct assessment method.
- The reduction applicable to the net module yield obtained in the 2023 tax period for those who determine the net yield of their economic activity using the objective assessment method is increased to 10%.
The tax rate is increased from 26% to 27% for income over 200,000 euros that is included in the savings base. It is also increased to 28% for income over 300,000 euros.
The scope of the benefit of 100 euros of the maternity deduction is extended to all families with children aged 0 to 3 years and not only for working mothers.
Withholding rate for certain activities:
It establishes a withholding and payment on account percentage of 15% for income from work derived from the production of literary, artistic or scientific works and income from intellectual property, whatever its classification. The withholding rate will be 7% when:
- The rights are generated by a taxpayer whose income in this respect was less than 15,000 euros in the previous year and represents more than 75% of the sum of income from economic activities and income from work, provided that the payer is notified.
- These are advances on account derived from the assignment of the exploitation of copyright that are to be accrued over several years.
Corporate income tax
The tax rate applicable to entities with a net turnover of less than one million euros in the previous tax period is reduced from 25% to 23%.
Value Added Tax
The following amendments are established in relation to uncollectible credits:
- The period is extended from 3 to 6 months for issuing the corrective invoice, after the end of the period of one year or six months from the accrual of the transaction.
- The means that can be used to claim payment from the debtor are made more flexible.
- The minimum amount of the taxable base is reduced from 300 to 50 euros for the transaction that can be modified when the debtor is considered to be a final consumer.
Allows for the recovery of VAT dues in the case of bad debts resulting from insolvency proceedings declared by a court in another member state.
Reduced tax rate of 4%:
It provides for its application to tampons, sanitary towels and panty liners, as they are products of basic necessity, as well as to condoms and other non-medicinal contraceptives.
Tax on the Increase in the Value of Urban Land
The amounts of the maximum coefficients foreseen to be applied to the value of the land are updated according to the period of generation of the increase in value, for the determination of the taxable base of the tax.
Legal interest and late payment interest
The percentages of the legal interest rate are also increased to 3.25% (currently 3%) and late payment interest to 4.0625% (now 3.75%). On the other hand, the Government has announced other tax measures, with a temporary nature for the years 2023 and 2024, of which it has not published their possible regulation. The main proposals are set out below:
This will be a temporary tax for the years 2023 and 2024, although a review clause will be included to assess its continuation. It should be noted that this tax will affect net assets of more than 3 million euros. The tax rate will be 1.7% for assets between 3 and 5 million euros; 2.1% for assets between 5 and 10 million euros; and 3.5% for assets over 10 million euros. However, in order to avoid double taxation, Solidarity Tax taxpayers will only be taxed on the part of their assets that has not been taxed by their Autonomous Community or the Wealth Tax liability will be deductible, but this is a matter to be determined.
Corporate Income Tax for consolidated groups
A regulatory amendment has been announced in order to limit the offsetting of losses in consolidated groups of companies to 50%. We will analyse and disseminate the draft legislation once it has been published.
Finally, we would like to point out that the tax measures mentioned above are still subject to parliamentary processing, and it is therefore possible that changes may be made to the new features indicated.