2021 Spanish budget

Yesterday, December 23rd, 2020, the 2021 National Budget has been approved by the Spanish Government.  

Are you aware about the impact that the 2021 National Budget will have on your Spanish Taxes? Will you pay more taxes in 2021?  

Even when there are not too much changes introduced by the National Budget, it is important to take into account that the changes will have impact not only on those individuals with a high level of employment income but also to those who may obtain an important amount of saving or financial income or capital gains.   

The following are the most relevant changes introduced by the National Budget for 2021 tax year, which begins in the following days:  

• Non tax resident individuals: Income obtained, from the transfer of own capital to third parties (i.e. interest from bank accounts) and capital gains derived from the sale of moveable assets, will be exempt from taxation if the individual is considered as tax resident in an EEA country. Up to date, this exemption was only available for EU citizens.  
• Tax resident individuals: for individuals who are considered as tax resident in Spain the National Budget increases the tax rates, as follows:   
  • The General Taxable Base exceeding EUR 300.000 will be subject to 47% of taxes (currently the maximum tax rate was 45%).
  • Saving taxable income exceeding EUR 200.000 will be subject to a marginal rate of 26% (currently the maximum tax rate was 23%).

The Personal Income Tax depends on a 50% of each Autonomous Region, and the above-mentioned increases in the tax rate will only impact on the State rates. There may therefore be variations as a consequence of the regional rates approved by each Autonomous Region.   

• Special Tax Regime for individuals coming to work to Spain (i.e. Beckham Law). The General taxable base exceeding EUR 600,000 will be subject to a tax rate of 47% (currently 45%). Additionally, the saving taxable base exceeding EUR 200.000 will be subject to a tax rate of 26%. 
• In respect of the reduction from the taxable base applicable for Private Pension Plans, there will be a reduction from EUR 8.0000 to EUR 2.000, when the contributions are made only by the individuals. For contributions made by the employers, the reduction will increase up to EUR 8.000. Thus, there is an increase on the total reduction (individual and employers’ contributions) from EUR 8,000 to EUR 10,000.  
• In addition, contributions made on the benefit of the spouse, will be reduced from EUR 2.500 to EUR 1.000.  
• There will be also two important changes in respect of the Net Wealth Tax, as follows:   
  •  The tax credit for the tax liability is expressly repealed and from now on and extension of this tax will be made (or not) annually.  
  • The marginal rate of the tax is increased by 1 percentage point (from 2.5% to 3.5%) and it is applied to net worth above EUR 10,000,000.

This last change, as long as other measures are not incorporated, will be applicable to those taxpayers who are non-tax resident in Spain and to those others to which the Spanish region of residence has not approved its own rates. 

Finally, maximum annual base for Spanish Social Security contributions will remain the same as for the year 2020 (that is EUR 4.070,10) and there will not be changes in the corresponding social rates. Thus, in general terms, the maximum employees’ annual payments to the Spanish Social Security will amount to EUR 3,101.42 (i.e. EUR 258.45 per month).

Do not hesitate to contact as at info@albeatax.com, in the case you need further information.