At the beginning of the year, we remind our clients of the main tax news of PGE Law 11/2020 for the year 2021.

Main novelties in personal income tax effective January 1, 2021:

Modifies the general income tax scale, adding a new tranche to the part of the taxable base that exceeds € 300,000 to which a tax rate of 24.50% will be applied.

Modifies the scale of withholdings and payments on account of the income from work derived from labor or statutory relations and pensions and passive assets, establishing a new section in the part of the base that exceeds € 300,000 to which a rate of 47.00% retention.

Modifies the scale applied to the part of the taxable base of savings, which is taxed on capital income, establishing a new tranche for the part of the base that exceeds € 200,000, to which a rate of 26.00% will be applied (13% state and 13% autonomous).

In private insurances that exclusively cover the risk of severe dependency or high dependency, the set of reductions practiced by all people who pay premiums in favor of the same taxpayer, including those of the taxpayer himself, may not exceed 2,000 euros per year (Previously the limit was 8,000 euros per year).

In contributions to social security systems in which the taxpayer’s spouse is a participant, mutual member, or holder, the maximum limit of these contributions will be € 1,000 per year (previously the limit was € 2,500).

It modifies the joint general maximum limit of reduction applied to the tax base of contributions and contributions to social security systems, reducing it from € 8,000 to € 2,000 per year. Although this limit will be increased by 8,000 euros, provided that the increase comes from business contributions. The annual limit of 5,000 euros is maintained for the premiums for group long-term care insurance paid by the company. The joint maximum annual financial limit is also reduced by the same amounts and casuistry.

Extension of the exclusive limits for the application of the objective estimation method in personal income tax for the year 2021. The limits for the application of the simplified regime and the special regime of agriculture, livestock, and fishing in VAT are also extended for the year 2021.

Main novelties in Corporation Tax:

Regarding the common rules applicable to deductions to incentivize certain activities, the increased limit of the deduction to 50% also applies (in addition to R + D + i activities) to deductions for film productions, audiovisual series and shows Live performing arts and music, when these deductions exceed 10% of the full fee reduced in the deductions to avoid international double taxation and bonuses. This amendment takes effect on January 1, 2021.

It establishes the possibility that the taxpayer who participates in the financing of Spanish productions of feature films and cinematographic short films and of audiovisual fiction, animation, documentary series or production and exhibition of live performances of performing and musical arts carried out by another taxpayer, may apply the deduction provided for in articles 36.1 and 3 of the LIS. It will be necessary for the producer and the participating taxpayer to sign a financing contract, among other requirements. This amendment takes effect on January 1, 2021.

It modifies the exemption on dividends and the income derived from the transfer of securities representing the own funds of resident and non-resident entities, and the deduction to avoid international economic double taxation: dividends and profit shares, eliminating the alternative requirement that the value of the acquisition of the stake is over 20 million euros, among other novelties. The application of the exemption or deduction will be limited to the assumption that there is a percentage of participation, direct or indirect, in the capital or equity, of at least 5%, establishing a transitional tax regime of 5 years ( 2021 -2025) for the shares acquired in the tax periods started prior to January 1, 2021, with an acquisition value greater than 20 million without reaching the 5% percentage, provided that the rest of the requirements are met.

Main novelties in the Wealth Tax:

Effective January 1, 2021, it increases the tax rate applicable to the last section of the rate on the state scale, from 2.5% to 3.5%, and restores the indefinite validity of the tax.

The main news in VAT:

The tax rate applicable to soft drinks, juices, and soft drinks with added sugars or sweeteners will be 21%, with effect from January 1, 2021.

Other measures:

The legal money interest rate is set at 3.00% until December 31, 2021.

The default interest rate of the LGT and the default interest rate of the General Subsidies Law will be 3.75% in 2021.

The public indicator of multiple effects income (IPREM) for 2021 increases by approximately 5%, and is established in the following amounts:

The daily IPREM, 18.83 euros

The monthly IPREM, 564.90 euros

The annual IPREM, 6,778.80 euros

In the cases in which the reference to the SMI has been replaced by the reference in the IPREM in the application of the provisions of RD-law 3/2004, the annual amount of the IPREM will be 7,908.60 euros when the corresponding regulations refer to the minimum interprofessional salary in the annual calculation unless extraordinary payments are expressly excluded; in this case, the amount will be 6,778.80 euros.

If you have any questions or to complete the contents, you can contact our firm.