On December 21, 2024, Law 7/2024 was published in the BOE, which introduces wide-ranging tax reforms applicable from 2025. Below, we present a summary of the most relevant measures:

     1. Personal Income Tax (IRPF)

  • Exemptions for damages from DANA 2024: Extraordinary compensations intended to cover personal and material damages suffered by employees and family members, paid between October 29 and December 31, 2024, are exempt.
  • Savings tax: For incomes over €300,000, the applicable rate rises to 30%, divided between state tax (15%) and regional tax (15%). This change also affects the regime for displaced workers.
  • Artistic income: A specific tax reduction is created for exceptional income derived from artistic activities, under defined conditions and with effects from January 1, 2025.
  • Refunds to pensioners: The AEAT establishes a procedure to manage refunds related to contributions to mutual societies, adapting to current jurisprudence. This new procedure paralyzes pending refunds in progress.

     2. Corporate Tax (IS)

  • New deductibility rules: Expenses related to the new Complementary Tax will not be deductible, nor will income derived from its accounting be computed.
  • Capitalization reserve: The reduction in the tax base increases to 20%, with additional incentives for companies that increase their workforce by 2% or more.
  • Reduction of tax rates: Microenterprises and small entities will see a progressive decrease in the tax rate between 2025 and 2027, favoring businesses with lower turnover. The tax reduction means a reduction in the tax rate from this year from 25% to 20% for small businesses and from 23% to 20% for microenterprises. In addition, companies with a turnover of less than one million euros will be able to benefit from a special deduction in corporate tax if they reinvest capital in job creation.
  • Limitations for large companies: Restrictions on the compensation of negative bases and deductions for international double taxation.
  • Tax consolidation: Limitations for the integration of negative bases in tax groups are extended, except for foundations.

     3. Value Added Tax (VAT)

  • Reduced rate: 4% will apply to fermented milk.
  • Fuels: Changes in VAT settlement and guarantees for gasoline and biofuels.

     4. New taxes and repeals

  • Complementary Tax: Seeks to guarantee a global minimum level of taxation for large multinational and national groups.
  • Tax on financial entities: Taxes the margin of interests and commissions.
  • Tax on tobacco products: A new tax is created for e-cigarette liquids.
  • Repeal: The temporary energy levy is eliminated, although a new one is regulated for 2025.

These updates stand out for their impact on business and personal taxation, reflecting a commitment to equity and sustainability of the tax system.

You can contact our team to assess how these measures may affect you. If you want to expand the information or receive personalized advice from our experts in the tax department of addwill, you have the option to leave your query by clicking here. We will be glad to help you.