Spain: Three Tax Bills Approved for Parliamentary Submission
Three bills containing most of the measures of the tax reform that was announced in June were submitted to Parliament on August 1, 2014.
However, while most of the measures are as stated in June, there have been a few amendments - details of which are highlighted below:
Individual Income Tax
- An increase in the exemption for severance payments to EUR 180,000 (in the draft bill, the amount was limited to EUR 2,000 per year of employment). Any payments in excess of this amount will be taxed.
- The disposal of any type of assets by individuals older than 65 years will be exempt from capital gains tax if the total gross proceeds are reinvested into pension annuities (up to EUR 240,000). Partial exemption will be available in proportion to the investment.
- Permitted redemptions of contributions made to pension plans, assured savings plans, company savings plans and insurance contracts with mutual insurance companies following 10 years of investment.
- The minimum term for an individual systematic savings plan is reduced from 10 to 5 years (these are savings plans structured as life insurance schemes with end of plan annuities).
- Tax exemption applied to 60% of the income derived by landlords from the renting of residential properties.
Corporate Income Tax
- Where 10% of revenues are applied to research and development (R&D) activities, companies will be permitted to monetize the R&D tax credit up to EUR 5 million. The tax credit will be expanded to include innovation in animation and video games.
- The existing limitation on the deduction of unused losses (up to 50% or 25% of the tax base) will be applied before the tax base is reduced by the proposed new special tax-free reserve.
- There will be a new tax credit applied to 20% of direct production costs associated with live musical and visual arts performances (limited to EUR 500,000 per year and per taxpayer).