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TAX NEWS FOR 2021 IN SPAIN

The Government has published the fiscal news for 2021. These are the main changes for this year.

 

Income Tax

 

* Limit of 2,000 euros of personal contributions to Pension Plans (before the maximum amount was 8,000 euros), Although, this limit will be increased by 8,000 euros, in case the increase comes from business contributions. The additional reduction for contributions in favour of the spouse will be 1,000 euros per year (2,500 euros up to 2,020).

 

* Increase in the marginal rates of Income Tax for people with incomes over 300,000 euros.

 

* Increase in marginal rates for savings income (capital gains, dividends, etc.) above 200,000 euros, which now will be taxed at 26% (before 23%).

 

Wealth tax (“Impuesto de Patrimonio”)

 

* For the state scale, the tax rate for higher cases is increased, from 2.5% to 3.5%.

 

Corporation Tax

 

* Limitation of the exemption on dividends and incomes of sales of shares in entities resident and not resident in Spanish territory. The exemption will be reduced a by 5% for management expenses relating to those holdings. So the amount that will be exempt will be 95% of that dividend or income, instead of 100% as before.

However in some cases this 100% exemption can be kept for a period limited to three years, where they come from a subsidiary, resident or not in Spanish territory, incorporated after 1st January 2021.

 

* Limitation on the deduction of financial expenses in relation with the dividends received by the company.

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