Tax proposals introduced in the General State Budget Bill for the year 2022
The PrLPGE 2022 includes a number of tax changes applicable to fiscal years starting from 2022 onwards.
The following is a brief summary of the measures relating to Personal Income Tax, Value Added Tax and Corporation Tax because of the impact they may have on most taxpayers from 2022 onwards. For a better understanding, we detail below the modifications established in the Bill by tax:
- Personal Income Tax:
Contributions and contributions to social welfare systems:
The draft proposes to reduce the general limit of reduction in the taxable base for contributions to social welfare systems from 2,000 to 1,500 euros per year. Notwithstanding the above, the limit of 30% of the sum of the net income from work and economic activities individually in the year is maintained.
Therefore, for the purposes of analysing the impact of the deduction, both limits must be taken into account, given that the lower of the two magnitudes is applied. This limit would be increased by 8,500 euros, provided that the increase comes from company contributions, or from contributions by the worker to the same social welfare instrument for an amount equal to or less than the respective company contribution .
For these purposes, the amounts contributed by the company deriving from a decision by the worker shall be considered as contributions by the worker. This amendment would be in force indefinitely from 2022.
Objective direct estimation It is proposed to extend for the 2022 tax period the quantitative limits that delimit the scope of application of the objective assessment method for Personal Income Tax, with the exception of agricultural, livestock and forestry activities, which have their own quantitative limit based on the volume of income.
- Value Added Tax
As in the previous point, the limits for the application of the simplified system and the special system for agriculture, livestock farming and fishing in Value Added Tax would be extended for the 2022 tax period.
- Corporate income tax
Minimum rate In corporate income tax, it is proposed to set a minimum tax rate of 15% of the tax base for taxpayers with a net turnover of at least 20 million euros, obtained during the 12 months prior to the date on which the tax period begins, and for groups of companies to which the tax consolidation regime applies, irrespective of their netturnover.
In these cases, the net tax payable cannot be less than the result of applying 15% to the tax base, less or increased, where applicable and as appropriate, by the application or recovery of the equalisation reserve.
The provisions of the previous paragraph would not apply to taxpayers who pay tax at the rates of 10%, 1% or 0% (Pension Funds) or to the entities of Law 11/2009, of 26 October, which regulates Listed Public Limited Companies for Investment in the Real Estate Market. For the purposes of determining the minimum net tax payable, the minimum percentage of 15% shall be 10% for newly created entities taxed at the rate of 15% in accordance with the provisions of Article 29(1) of this Tax Law.
The minimum rate of 18%would apply tocredit institutions, as well as to entities engaged in the exploration, research and exploitation of hydrocarbon deposits and underground storage facilities .
In the case of co-operatives, the minimum net tax liability could not be less than the result of applying 60% to the gross tax liability calculated in accordance with the provisions of Law 20/1990, of 19 December 1990, on the Tax Regime for Co-operatives.
In Canary Islands Special Zone Entities, the positive tax base to which the percentage is applied shall not include that part of the tax base corresponding to operations materially and effectively carried out within the geographical area of the said Zone and which is taxed at the special tax rate regulated in Article 43 of Law 19/1994, of 6th July, amending the Canary Islands Economic and Fiscal Regime For the calculation of the minimum tax liability, the following must be taken into account:
- Once the gross tax liability has been calculated, it will be reduced, where applicable, by the application of the allowances established for investments made by the port authorities.
- Deductions for international, economic and legal double taxation and those derived from the imputation of positive income derived from non-resident entities and permanent establishments will also be applied.
In the event that, as a result of the provisions of the two previous paragraphs, an amount lower than the aforementioned minimum net tax liability results, the minimum net tax liability resulting from applying the minimum rate must be taken into account as an exception.
If, on the other hand, after applying the reduction of the allowances and deductions, the result is an amount greater than the minimum net tax liability, the remaining deductions may be applied, subject to the limits applicable in each case, up to the amount of the said net tax liability.
It should be borne in mind that the amounts not deducted by application of the provisions of the previous section may be deducted in subsequent tax periods in accordance with the regulations applicable in each case.
Finally, a modification is also included with regard to the deduction of withholdings, payments on account and instalments.
In this regard, it is stated that when these items exceed the amount of the net tax liability or, where applicable, the minimum net tax liability, the tax authorities will automatically refund the excess.
It should be borne in mind that this measure is also applicable to the calculation of the minimum net tax liability for non-resident income tax, for income obtained through a permanent establishment. This amendment affects tax periods commencing on or after 1 January 2022 and is valid indefinitely.
Allowance for entities engaged in the rental of dwellings The rebate is reduced from 85% to 40% applicable to the part of the gross tax liability corresponding to income derived from the rental of dwellings that meet the requirements to be able to apply the system.
- Legal interest on money, late payment interest for tax debts and credits derived from subsidies.
The legal interest rate remains the same as in 2021 at 3%. The interest for late payment applicable to both tax debts and credits derived from subsidies remains at 3.75%.
Following the presentation of the Commission’s opinion on 19 November, the Commission’s opinion is due to be adopted by the plenary session from 22 to 25 November.
It should be noted that it is necessary to keep an eye on the possible modifications that may arise as a result of the presentation of amendments to the draft budget law.
Thus, in view of the effects that the proposals developed above may have on entities, specifically the minimum taxation referred to, insofar as it affects entities with a low turnover and, in groups of companies without any limit, different lobbies have presented amendments to the proposed regulation.
Among others, it is proposed to limit the impact of this minimum taxation on corporate income tax for those entities that carry out R&D&I activities. Similarly, the impact and existing regulation with regard to the reduction of the aforementioned rebate applicable to entities engaged in the leasing of dwellings is also analysed.
Given the magnitude and importance of some of the modifications proposed, AddVANTE will monitor the possible amendments that may be approved with respect to these points. In any event, we remain at your disposal to discuss any doubts in this regard, as well as to help you analyse the possible impact that may be generated both at the level of the entities taxed individually and at the level of tax consolidation.