Following is a summary of the budget's main tax implications, which would be generally applicable beginning January 1, 2011.
Personal Income Tax
The marginal tax rates for taxpayers with annual taxable income above €120,000 would be increased. Taxpayers with annual taxable income between €120,000 and €175,000 would be subject to a marginal tax rate of 44 percent, and those with taxable income above €175,000 would be charged 45 percent. Because the governments of the autonomous regions can also modify these rates, it is possible that the marginal tax rate could reach a maximum of 49 percent in some regions (for example, Catalonia). The current marginal rate for taxpayers with annual taxable income above €120,000 is 43 percent.
In addition, the 40 percent reduction of the tax base for nonperiodic income generated over more than two years would apply to income only up to €300,000. Thus, the reduction would no longer apply to income exceeding that amount.
The 15 percent tax credit for expenses incurred to buy or renovate a taxpayer's primary residence would be eliminated for taxpayers with a tax base equal to or exceeding €24,170.20. In other words, to qualify for the tax credit, a taxpayer must have a tax base under €24,170.20. However, a transitional regime would apply to taxpayers who buy or make payments to build their primary residence before January 1, 2011.
The reduction for income derived from the rental of dwellings would increase from 50 percent to 60 percent. Moreover, for the current 100 percent reduction applicable for rents paid by lessees up to 35 years old, the age of the lessee would be reduced from 35 to 30. A transitional regime also would apply in this case.
Income derived from investments in Spanish collective investment funds (institucións de inversion colectiva, or IICs) as a result of a reduction in share capital or a distribution of share premiums generally would be taxed at rates of 19 percent to 21 percent, with retroactive effect from September 23, 2010.
Nonresident Income Tax
To bring Spanish legislation into line with EU resolutions, the budget includes modifications for dividends distributed by Spanish subsidiaries to their EU-based parent companies or permanent establishments. For dividends distributed by Spanish companies to EU-based parent companies or PEs, the minimum participation percentage to benefit from a withholding tax exemption in Spain would be reduced to 5 percent (from 10 percent), provided that all other conditions to apply the EU parent-subsidiary directive as implemented in Spain are met. (A minimum holding period of one year would be required.)
Corporate Income Tax
Companies that no longer qualify for the special tax regime applicable to small and medium-size enterprises (those that in 2010 recorded a turnover of less than €8 million for the previous tax year) could continue to apply the regime for three years after losing their status as SMEs. SMEs would pay a reduced corporate income tax rate of 25 percent on profits of up to €120,202.41.
In addition, IIC shareholders that are corporate income taxpayers would be taxed on all income derived from share capital reductions or share premium distributions, without any deductions.
Finally, the budget would eliminate the tax-deductible depreciation (5 percent annually) of financial goodwill derived from investments in EU companies. (The depreciation would still apply to non-EU companies.)
Capital Gains Tax
Capital increases in SMEs in 2011 and 2012 would be exempt from capital gains tax (the standard rate is 1 percent).
Fuente: Tax Analysts