ARCHIVED - Spanish government reduces income tax for lower earners

Spain has introduced a series a fiscal measures which include a tax on the rich and savings for 50% of workers

These are the main changes the government has made:

• The VAT rate on feminine hygiene products will be lowered from 10% to 4%.
• A temporary ‘solidarity tax’ will be created for 2023 and 2024 which will affect anyone with a net worth of more than 3 million euros. The government estimates that the measure will impact 23,000 taxpayers to the tune of 1,500 million. The tax will have three sections: a rate of 1.7% for assets of between 3 and 5 million; 2.1% for assets of between 5 and 10 million euros, and 3.5% for assets of more than 10 million euros.
• The tax rate on capital gains of more than 200,000 euros will increase from 26% to 27%, and for gains of more than 300,000 it will jump to 28%. This is expected to collect 204 million and affect 17,814 taxpayers.
• The cut-off for salaries exempt from paying income tax will be raised from 14,000 euros to 15,000 euros.
• The minister has announced a reduction in corporate tax by two points (to 23%) for micro-SMEs, which invoice less than one million euros. Some 407,000 companies will benefit with savings of 292 million.
• For freelancers, the reduction of deductible expenses that are difficult to justify under the simplified direct estimation regime will be increased from 5% to 7%. This will benefit more than 577,000 self-employed people in Spain, who will save 184 million euros.