Friday, 12 November 2010

Resumen de las modificaciones previstas en los Reglamentos

The Spanish Ministry of Economy and Taxation has launched a public consultation period on a bill designed to implement several tax provisions (some of them already included in the draft 2011 budget law). The proposed bill, published October 29, is divided into five articles affecting existing regulations on personal income tax, corporate income tax, nonresident income tax, and VAT. 

Personal Income Tax

The proposed bill would exempt from income tax electronic cards (or other electronic means) given to employees to use for public transport to the workplace. The cheque transporte would be tax exempt up to €136.36 per month and €1,500 per year.
The following are highlights of provisions implementing tax measures in the 2011 draft budget:
  • the withholding tax bracket for employment income would increase to a maximum rate of 45 percent (the current maximum rate is 43 percent) 1;
  • taxpayers qualifying for lower withholding tax rates on employment and professional income because they incurred expenses when buying a primary residence would need a tax base lower than €22,000 (for 2010, the tax base could not be higher than €33,007.20)2; and
  • Spanish collective investment funds (instituciĆ³ns de inversion colectiva, or IICs) would apply a withholding tax of 19 percent on income derived from distributing profits through a share capital reduction or a distribution of share premiums.3
Nonresident Income Tax and Corporate Income Tax

In line with the provisions on personal income tax, IICs that distribute profits through a share capital reduction or a distribution of share premiums to nonresident or company shareholders would apply a withholding tax rate of 19 percent.

VAT and Invoicing Regulations

To incorporate EU directives into Spanish law and adapt tax legislation to new Spanish laws, the bill modifies both VAT and invoicing regulations, making the following changes:
  • documents needed to exempt some imports from VAT would have to meet specific requirements;
  • requesting a debtor through a public notary would be sufficient to recover non-paid VAT from the tax authorities (under the current regulation, a legal claim must be filed); and
  • based on the principle of freedom of evidence, more types of evidence would be accepted to exempt some international transactions from VAT.

Finally, claims for refunds of VAT charged to nonresidents during 2009 could be filed until March 31, 2011, because 2010 is the first year in which claims must be filed via the electronic portal set up by the tax authorities in the nonresidents' member states.

1 Under the tax measures in the draft 2011 budget (to be approved by parliament in the last quarter of 2010), a maximum tax rate of 44 percent would apply to taxpayers with an annual taxable income over €120,000, and a 45 percent rate would apply to those with an annual taxable income over €175,000.
2 Under the tax measures in the draft 2011 budget, the 15 percent tax credit for expenses (including interest) incurred when a taxpayer buys a residence would be eliminated for taxpayers with a tax base equal to or exceeding €24,170.20.
3 In the draft 2011 budget, these transactions would be taxed at 19 percent (on amounts under €6,000) and 21 percent (on amounts over €6,000); this would be retroactive to September 23, 2010.