Draft Law on measures to prevent and combat tax fraud

Draft Law on measures to prevent and combat tax fraud

Dear Customer:

Recently, the Council of Ministers approved the General State Budget Bill for 2021. In summary, the Bill incorporates new tax measures that are added to those introduced through the Bill of measures for the prevention and fight against tax fraud. .

Among these measures, the following should be highlighted:

I. TAX ON INCOME OF NATURAL PERSONS



Increase of two percentage points in the General Tax Base for income that exceeds 300,000 euros.

This new section in the state tax scale represents an increase applicable to the maximum marginal section, which will go from 22.5% to 24.5%. The scale to determine taxation will require adding to this rate the rate corresponding to the Autonomous Community of residence of the taxpayer. Thus, for example, the resulting consolidation rate in the Community of Madrid would amount to a maximum marginal rate of 45.5%.

Increase of three percentage points in the Savings Tax Base for capital income exceeding 200,000 euros.

The current tax rate applicable to savings income is a progressive rate divided into three brackets, depending on the yield or profit obtained. With the measure contained in the Project, it would mean including an additional tranche of 26% for savings income that exceeds 200,000 euros.

Modification of reductions for contributions to pension plans. It is proposed to reduce the maximum limit for contributions to pension plans and equivalent systems, from 8,000 euros per year to 2,000 euros. However, the previous quantitative limit is increased to the limit of 10,000 euros per year when individual contributions are complemented by contributions made by companies, with the contributions made by individual entrepreneurs to employment pension plans or mutual benefit societies being equated to these. of those who are promoters and participants.

II. CORPORATION TAX



It is in the Corporate Tax where the most far-reaching measures are adopted, especially highlighting the limitation of the exemption provided for in Article 21 of the Corporate Tax Law.

The exemption with respect to dividends and capital gains obtained from resident and non-resident entities is limited to 95%. This means that for a dividend or capital gain derived from the sale of shares or social participations in which the requirements set forth in Article 21 of the Tax Law are met, the exemption is limited to 95% so that, as a general rule , there would be a taxation at the effective rate of 1.25%. On the other hand, the exemption on dividends or income derived from the transfer of shares whose acquisition value would have been greater than 20 million euros is eliminated, with the aim of limiting the application of the aforementioned exemption to situations in which It has a participation percentage of 5%.

The aforementioned limitation on the 95% exemption will not be applicable to dividends received by entities that, having a turnover of less than 40 million euros, constitute their first subsidiary as of January 1, 2021. In these cases, it will be maintained. full exemption, but only during the first three years from its constitution.

The limitation of the exemption that determines the taxation of distributed dividends will apply, without distinction, between entities that are or are not part of the same tax group, which generates a cumulative effect in a cascade of taxation at the effective rate of 1.25 %, without any exception.

Given this situation, the potential impacts of the rule that is expected to come into force from 2021 must be planned and, in particular, the possibility of anticipating the repatriation of dividends to 2020, undertaking restructuring to avoid chains of companies, etc. must be analyzed.

III. OTHER TAXES



Regarding the Wealth Tax, which is established permanently, it is intended to raise the marginal rate applicable to assets exceeding 10,695,996 euros from 2.5% to 3.5%. However, it must be remembered that the 100% regional bonus for the Community of Madrid is still maintained.

Other measures would be the increase in the tax rate of Value Added Tax from 10% to 21% applicable to sugary drinks, the increase in the general rate of diesel by 3.8 cents per liter or the increase in the tax rate applicable to premiums. of insurance that would go from the current 6% to 8%.

We remain at your disposal for any questions or clarifications in this regard.

In Madrid, November 3, 2020.

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