Fiscal developments in the General State Budget Bill for next year 2023

Fiscal developments in the General State Budget Bill for next year 2023

On October 4, the General State Budget Bill 2023 was approved, which introduces various fiscal novelties. Below, some of the measures that we consider most relevant will be summarized, without prejudice to the fact that they may undergo definitive modifications:

1. Personal Income Tax

The following measures are proposed in personal income tax with effect from January 1, 2023:

- Increase in tax rates on the Savings Tax Base
The taxation of savings income that exceeds 200,000 euros is increased.
   or €200,000.01 to €300,000: 27%
   o From €300,000.01: 28%

- Extension of the reduction for obtaining income from work and for income from economic activities in direct simplified and objective estimation
Taxpayers whose tax base is less than €19,747.50 will have the right to apply the reduction for income from work and economic activities.

The deduction percentage for expenses that are difficult to justify amounts to 7% for taxpayers who pay taxes in a simplified direct estimate.

A 10% reduction on the net income is established for those who pay taxes using the objective estimation method.

- Modification of the limit of the obligation to declare
The obligation to declare for those who receive income from more than one payer is established at 15,000 euros. The individual limit continues at €22,000, and is also applicable to taxpayers who receive income from more than one payer, as long as the amount of the second and subsequent payers does not exceed €1,500 per year as a whole.

- Imputation of real estate income
Properties located in municipalities that have reviewed the cadastral values through a general collective valuation procedure effective as of January 1, 2012 will apply the percentage of 1.1% to determine the allocation of income.

2. Corporate Tax
The tax rate applicable to entities whose INCN is less than €1M is reduced to 23%. For these purposes, the turnover will be computed at the commercial group level.

This reduced tax rate will not be applicable to property entities.

3. Value Added Tax
The main proposals in relation to VAT are the following:

- Modification of the subjective scope of the special location rule due to effective use in the territory of application of the tax
It is proposed that this rule is not applicable to the provision of services whose recipients are businessmen or professionals, with the exception of the following situations:

   or   Leasing of means of transportation.
   o   Provision of services related to financial and insurance services.

Likewise, it is proposed that it not be applicable in the case of intermediation services, telecommunications, provided electronically, radio and television.

Consequently, the special rule of effective use may be applied to services provided to recipients who are not businessmen or professionals, provided that they are services provided for in article 69. Two of the VAT Law (advice, audit, advertising... ), as well as rentals of means of transport.

- Modification of the assumptions of reversal of the taxable person
It excludes from its application the provision of real estate leasing services, as well as intermediation, subject to and not exempt from the Tax carried out by persons or entities not established in the territory of application of the VAT.

- Clarification in the application of the distance sales regime and taxation at source
The limit of 10,000 euros to be able to choose to be taxed at source in the so-called special regime for intra-Community distance sales of goods will not apply when sales are made totally or partially from a Member State other than that of establishment.

- Modification of the tax base in case of bad debts
It is planned to reduce the minimum amount of the tax base to 50 euros to consider a credit as uncollectible when the defaulting recipient is a consumer.

Likewise, the possibility of replacing the judicial claim or notarial requirement with any other means that proves the collection claim is foreseen, making the requirements for the modification of tax bases more flexible, and the period is extended from 3 to 6 months to make said modifications.

Finally, the modification of the VAT tax base is allowed when the recipient is not established in the territory of application of VAT, Canary Islands, Ceuta or Melilla, whenever there is an insolvency process declared by a court of another Member State.

4. Tax on the Increase in Value of Urban Land

A new table is provided for the calculation of the municipal capital gain in the objective estimation modality, increasing the maximum coefficients applicable to the value of the land at the time of accrual.

5. Other measures of interest

- The legal interest on money is set at 3.25% and the default interest at 4.0625%.
- Introduction of a special tax regime for the Balearic Islands. Among other advantages, it establishes the possibility of applying a reduction in IS and IRNR for reserving investments in the Balearic Islands.

Tax Department.

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