Over the past 12 months, the following significant reforms have been made to Spanish law on direct taxation of individuals:
- On 3 December 2016, Royal Decree-Law 3/2016, of 2 December 2016, adopting tax-related measures aimed at consolidating public finances and other urgent measures on social matters, was published in the Official State Gazette. The following sections contain a summary of the most relevant changes in tax matters contained in such legislation. The main measures contained in this law that affect the taxation of individuals are the following:
- Wealth tax is maintained in 2017, extending for another year the temporal scope of application of a measure that was intended to be exceptional. The above applies without prejudice to the legislative competence that the Autonomous Communities may exercise with respect to such tax.
- The deferral or payment in instalments of the following tax debts is eliminated as of 1 January 2017:
- Debts resulting from the enforcement of non-appealable rulings disallowing, totally or in part, an appeal or economic-administrative claim, which were suspended during the processing of such appeals or claims.
- Debts deriving from taxes that should be charged in accordance with applicable law, unless it may be duly evidenced that such taxes have not actually been paid.
- Debts relating to tax obligations that must be met by the party required to make payment in instalments of corporate income tax (CIT).
The above changes entered into force on 1 January 2017.
Likewise, the exception envisaged in the General Tax Law in relation to the impossibility of deferring or paying in instalments tax debts relating to tax obligations that must be fulfilled by the withholder or party required to make interim payments is eliminated with effect from 1 January 2017.
A transitional arrangement is established for all the above cases, under which, deferrals or payments in instalments whose proceedings were instigated before 1 January 2017 will be regulated by legislation prior to such date until their completion.
- With effect from 1 January 2017, payments in kind will not be allowed in respect of tax debts that have non-deferrable status in accordance with the provisions of Article 65.2 of the General Tax Law.
- Cadastral values are updated through this Royal Decree-Law so that the increase takes effect as regards property tax, a tax that accrues on 1 January. According to the Land Registry Law, the values should have been updated by the Budget Law. However, because of the delay in forming a government, it was impossible for the Bill to pass through Parliament before the end of the year.
- On 26 October 2017, Law 6/2017, of 24 October 2017, for urgent measures on Autonomous work, was published in the Official State Gazette. The main measure contained in this law that affects the taxation of individuals is the consideration of deductible expense, for the determination of the net business income determined using the direct evaluation method, of the maintenance diet expense and a percentage of the expenses in supplies for the habitual residence partially affected on the economic activity, if certain requirements are met.
These measures will enter into force on 1 January 2018.