The Spanish Economy and Tax Cuts

Filed under : Tax Planning - Inheritance
spanish inheritance tax

This last year has seen an alarming rise in the number of young people leaving Spain to seek work abroad. The UK has been one of the most popular destinations with a 50% increase in the number of Spanish people registering for a National Insurance number in 2013. Traditionally the northern Europeans have come to Spain for the lifestyle and the sun and now the Spanish emigration north is for employment. The government have recently announced tax cuts aiming to revive the economy and reduce unemployment.

Corporation tax is to be reduced in Spain with the first cut to 28% coming in 2015 and a further cut to 25% in 2016. Small and medium sized businesses known as PYMES dominate the Spanish economy and in 2013 the government reduced the tax rates for these companies. For PYMES there will also be new rules to allow some undistributed profits to be set off against future losses to maintain a lower tax rate under certain conditions.

New and start-up businesses are now taxed at 15% on the first 300.000€ and at 20% thereafter during their first tax return year. An established business with a net income of less than 5 million euros and with less than 25 workers will pay 20% on the first 300.000€ and 25% thereafter.

Personal tax is also set to be reduced particularly for those on lower incomes. Large families or those looking after elderly or disabled family members will also see substantial reductions in their taxes. The cuts are being brought in over a 2 year period and by 2016 taxpayers will be paying an average of 12.5% less in income tax. Those on lower incomes will benefit the most.

For further information or tax enquiries please visit your nearest De Cotta Law office of email in confidence to: [email protected]

Mijas-Costa / Calahonda – Coín – Nerja – Tenerife