Over the past year 2022, many new laws in the field of tax legislation were adopted in Spain and current laws and regulations were amended. Let’s consider the most significant of them, which, one way or another, affected a considerable part of the country’s residents.
Real Estate Transactions
We will start with Valor de Referencia, a new indicator that came into force on January 1, 2022 and has a direct impact on tax calculation related to buying and selling real estate in Spain, as well as its possession, inheritance and donation. Valor de Referencia is the estimated value of a property, calculated on the basis of notary registered transactions. It has nothing to do with either the cadastral, estimated or market value of real estate object.
In the calculation of Valor de Referencia, the real state of the object is not taken into account, but only the average price indicator for similar transactions recorded in the register of notaries in the reporting period. Valor de Referencia is subject to an annual automatic review, and can be requested it on the official website of the Cadastre.
From January 1, 2022, the following taxes are calculated from the value of Valor de Referencia in Spain:
- Property Transfer Tax and documented legal acts (ITPyAJD);
- Luxury Tax (IP);
- Inheritance and Gift Tax (ISyD).
At the same time, it should be remembered that if, for some reason, the price of the sale and purchase transaction is higher than Valor de Referencia (which is extremely rare), then the property transfer tax is calculated from this price. That is, in sales transactions, the higher value of the two is used for tax purposes.
The changes also affected the municipal tax – Plusvalía. These changes were legislatively fixed at the end of 2021, but real estate owners fully faced them in 2022. Now, when calculating the tax, two methods can be used: objective (it is also applied by default) or on the basis of true profits (on the application).
The payers of this tax are the sellers of real estate, as well as beneficiaries in case of inheriting or receiving a property as a gift.
Personal Income Tax
Minor changes were made to the Spanish Personal Income Tax Law (IRPF). Firstly, the personal and family non-taxable minimum was increased by 10%: from 5,550 € to 6,105 €. Exactly the same minimum will apply to persons over 65 years of age, persons with disabilities and dependents.
The progressive scale of personal income tax in Spain is set at the regional level, i.е. each autonomy develops its own scale and rates. In the Valencian Community, the minimum tax rate applicable to incomes not exceeding 12,000 € per year has been reduced from 10% to 9%.
Quotas for Entrepreneurs
In 2022, the amount of quotas for individual entrepreneurs (autónomos) who contribute to the social insurance fund has increased. If the minimum quota was 286 € in 2021, then it was increased to 296 € in 2022. In 2023: the minimum quota will be 230 € and the maximum quota will be 500 €.
Income Tax
In 2022, the minimum income tax rate (IS) in Spain was set at 15% for the following taxpayers:
- Companies whose net turnover in the previous reporting period did not exceed 20 million €;
- Companies that have chosen the fiscal consolidation regime for the purpose of calculating and paying income tax, regardless of turnover.
Also, new, newly created companies had the opportunity to pay tax at a rate of 10%. For companies operating in the field of property rental, the tax benefit was reduced from 85% to 40%.
Interest Rate and Penalties
The legal minimum rate in 2022 was fixed at 3%. The default interest rate (penalty) on tax debt was 3.75%.
In addition, since last year it is possible to request a reduction in penalties in return for a deal with the tax service and quick repayment of the appeared debt.
IPREM – Multifunctional General Income Index
The IPREM index is used to calculate various types of subsidies, social benefits and care, as well as minimum income or required economic resources for living when applying for a residence permit in Spain. In 2022, its amount was 579.02 € per month or 6,948.24 € per year. In 2023, it will be 600.00 € per month, 7,200.00 per year (12 payments) or 8,400.00 € per year (14 payments).
