In 2024 all of us who live in Spain face a number of tax changes: some were adopted in 2023 and then extended until the end of 2024, others are completely new. Let’s look at the most important changes affecting different aspects of life and work in Spain.
Income from renting out a home
In May last year a new housing law came into force in Spain, providing a number of personal income tax breaks for new long-term rental contracts. This applies to residential property that tenants rent to live in permanently, i.e. as their main home. In spring 2024 the personal income tax (IRPF, Impuesto sobre la Renta de las Personas Físicas) campaign for 2023 begins: landlords who signed long-term rental contracts in 2023 are entitled to reduce the net rental income in their return by 60%. For contracts signed in 2024, whose income must be declared in 2025, a similar reduction applies, but at a different rate: 50%.
Neither holiday lets, seasonal lets nor the letting of individual rooms qualify for this reduction.
The law raises the reduction to 90% in certain cases. This applies in particular if the home is in a high-demand area with an acute shortage of homes available to rent. The problem is that no Spanish autonomous community has yet approved a final list of such areas. Catalonia and the Basque Country were the first to start this work, but even there it is still far from finished. A reduction of up to 70% is available when you rent to young people aged 18 to 35, but, again, only in areas with a shortage of available housing.
In addition, bear in mind that the Government now requires all taxpayers to file their annual IRPF return electronically.
Taxes on electricity and gas
From 2024 the Spanish Government intends to gradually raise the taxes on electricity and gas that were cut in 2022. VAT (IVA), shown as a separate line on every bill, had been cut from 21% to 5%, but throughout 2024 it will be charged at 10%. The electricity generation tax was temporarily suspended (it used to be 7%), but it returns in 2024: at 3.5% until March and 5.25% until June. The special electricity tax was cut from 5.1% to 0.5%, but it will rise again in 2024: to 2.5% in the first quarter and 3.8% in the second quarter.
VAT on natural gas will stay at 10% for the first three months of 2024, and VAT on eco-fuels or biogas also at 10%, but for the first half of 2024.
Corporate tax for small and medium-sized businesses and self-employed contributions
In 2024 (for 2023), corporate tax for companies with a turnover of no more than €1 million that made a profit for the year will be charged at 23% (instead of 25%). Newly created companies may pay corporate tax at 15% in their first years of profitable activity.
Some of the changes also affect the self-employed. In 2024 the self-employed contribution (cuota de autónomos) will be charged on a progressive scale from €225 to €530 a month, depending on actual earnings. Self-employed people may change their contribution base every 2 months if needed, to match their social security contributions to their income if it fluctuates with the seasons.
Net income will be calculated as the difference between gross receipts and all expenses related to and necessary for the business. For self-employed people whose net income does not exceed the minimum interprofessional wage (SMI), set at €1,134 a month for 2024, the contribution will be €225. And, regardless of their total income for the year, all self-employed people must file an annual tax return, even if they were self-employed for just one day.
Cryptocurrency transactions
From 1 January 2024 all cryptocurrency transactions must be declared, including those carried out or held outside Spain. This declaration must be filed by both individuals and legal entities resident in Spain, and by permanent establishments in Spain of non-resident individuals and legal entities.
The informative declaration must contain details of all cryptocurrencies held outside Spain. It is filed by the beneficial owners, beneficiaries and persons authorised to hold or dispose of them, even if the cryptocurrency was owned or managed for only part of the year. The information must include the platform, the details and balance of each cryptocurrency in units and in euros, the total number of units in circulation at the start of the year, and much more.
Sales on online marketplaces
Under an EU-wide directive, from 1 January 2024 marketplaces, the online platforms for selling goods such as Vinted, Etsy or Wallapop, will report to the tax authorities of all EU member states, including Spain, those sellers whose sales during the reporting period exceeded 30 transactions or €2,000 in receipts.
VAT on basic foodstuffs
The reduced VAT (IVA) on basic foodstuffs will remain in place in the first half of 2024. It will be charged at 4% on the following goods: bread, flour, milk, cheese and eggs. VAT on pasta and vegetable oil will also be cut from 10% to 5%.
Buying an electric car
In 2023 a tax relief for buying an electric car was approved, valid until the end of 2024. All electric cars bought between 30 June 2023 and 31 December 2024 for private use, i.e. not used in a professional or business activity, qualify for a 15% deduction on the purchase price (the base for the deduction is capped at €20,000), which must be claimed in the annual tax return.
The same applies to installing equipment for charging an electric car: a 15% deduction on the cost, with a base of no more than €4,000.
Improving the energy efficiency of homes
The tax relief scheme for owners who have carried out work to improve the energy efficiency of their home has been extended until 31 December 2024. Personal income tax can be reduced in the annual return by 20, 40 or 60% of the expenses incurred (all of which, of course, must be backed by invoices). It is important to complete all the work before the end of this year.
A 20% tax deduction is available after improving the home’s heating/cooling system (total annual expenses capped at €5,000). The effectiveness of the work must be confirmed by an energy certificate. In other words, in addition to the invoices you need a certificate showing the energy rating of the specific home.
A 40% tax deduction applies to work that reduces the consumption of electricity from non-renewable sources (total annual expenses capped at €7,500). The work will be recognised as effective if consumption falls by at least 30%, or if the home’s energy rating rises to “A” or “B”, which, again, must be confirmed by an energy certificate.
A 60% tax deduction applies to residential buildings. That is, each owner is entitled to the deduction if the energy efficiency work was carried out on the whole building, covering all its homes, and the consumption of electricity from non-renewable sources fell by at least 30%, while the energy rating of the whole residential building rises to “A” or “B”.
