Over the past 12 months, the following significant reforms have been made to Spanish law on direct taxation of individuals:
On 26 October 2017, Law 6/2017, of 24 October 2017, for urgent measures on self-employment, was published in the Official State Gazette. The main measures contained in this law that affect the taxation of individuals are the following:
- Supply expenses (water, electricity, gas, telephony, Internet) will be partially deductible for personal income tax (PIT) purposes when the taxpayer partially uses their habitual residence to carry out an economic activity. Unless proven otherwise, the deduction will be 30% of the existing proportion between the square metres of the home intended for the activity with respect to the total area.
- In addition, maintenance expenses incurred by the taxpayer in the development of the economic activity will also be tax deductible, provided that certain conditions are met: (i) that they take place in catering and hospitality establishments and (ii) that they are paid using any electronic means of payment. With respect to the deductible amount, limits are the same as those set forth for employees.
- Health insurance premiums paid by the self-employed person in the part corresponding to their own coverage and that of their spouse and children under 25 who live with them will also be deductible. The maximum deduction limit will be 500 euros (EUR) for each of the persons indicated above or EUR 1,500 for each of them with a disability.
These measures entered into force on 1 January 2018.
On 30 December 2017, Royal Decree 1074/2017, of 29 December 2017, modifying Personal Income Tax Regulations was published in the Official State Gazette. The main measures contained in this regulation are the following:
- The tax exempt amounts of study and research grants are increased from 1 January 2018.
- It is clarified that, under certain circumstances and effective as of 1 January 2017, study expenses for the upgrading, training, or re-training of staff funded not by the employer but by other companies or entities are considered as indirectly financed by the employer and do not constitute remuneration in kind for PIT purposes.
- From 1 January 2018, the tax exempt amount for canteen services rendered indirectly (through meal vouchers or any form of electronic payment) is increased from the current EUR 9 to EUR 11 per day.
On 4 July 2018, Law 6/2018, of 3 July 2018, the General State Budget for 2018 was published in the Official State Gazette. The main measures contained in this law that affect individual taxes are:
- For tax years commencing on 1 January 2018, with the purpose of reducing the tax burden of workers with lower incomes, general reduction for earned employment income is increased from EUR 14,450 to EUR 16,825, with a complex transitory regime for 2018.
- From 1 January 2018, several tax credits are increased, such as the tax credits for maternity, for having a person with a disability in charge, for large families, or for income obtained in Ceuta or Melilla. A tax credit is introduced for taxpayers when other members of their family unit reside in another member state of the European Union (EU).
- For tax years commencing on 1 January 2018, the minimum threshold over which a PIT return must be filed is raised and an exemption is included for small amounts obtained from capital gains derived from public subsidies.
- From 5 July 2018, the exempt amount of the special tax levied on prizes received from lotteries and games organised by the State Lottery and Gaming Corporation or from lotteries organised by public bodies or entities that carry on social or welfare non-profit-making activities in other member states of the European Union is increased.
- Wealth tax is maintained in 2018, 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.