At the end of December, significant tax changes were approved through Law 7/2024 and Royal Decrees-Law 9/2024 and 10/2024. These modifications, effective January 1, 2025, aim to adapt the tax system to current economic challenges and promote a more balanced and efficient fiscal framework.
Key Changes to IRPF (Personal Income Tax)
- Higher declaration exemption thresholds: Starting January 1, 2025, taxpayers with annual incomes up to €22,000 will be exempt from filing income tax returns, provided income from a second payer does not exceed €2,500 (previously €1,500).
- Extended deductions for energy efficiency:
- Works to reduce heating and cooling demand in primary residences or rented properties will qualify for a 20% deduction, up to €5,000, until December 31, 2025.
- Improvements in non-renewable primary energy consumption will have a 40% deduction, capped at €7,500.
- Energy rehabilitation works in residential buildings will benefit from a 60% deduction, with an annual limit of €5,000, and up to €15,000 accumulated across subsequent years.
- Support for electric vehicles: The 15% deduction for purchasing a new electric vehicle or installing charging points in properties is extended until December 31, 2025. Deduction limits are €20,000 and €4,000, respectively.
- Increased marginal rate on savings income: Savings income exceeding €300,000 will now be taxed at 30%, up from 28%, reinforcing system progressivity.
- Reductions for exceptional artistic income: Income from artistic activities exceeding 130% of the average from the past three years will receive a 30% reduction, capped at €150,000 annually.
Updates to Corporate Tax
- Expanded capital reserve deductions: Companies can benefit from a reduction rate of 20%-30% if their workforce grows by 2%-10% or more. The reduction’s application limit increases to 20%-25% of the tax base, depending on business turnover.
- Reduced rates for microenterprises:
- Companies with annual revenues below €1 million will pay a 17% rate on their first €50,000 of taxable income and 20% on the remainder.
- Small entities with revenues below €10 million will benefit from a 20% rate.
- Global minimum taxation of 15%: A new complementary tax ensures that large multinational and national groups pay at least 15% of their profits in each jurisdiction, aligning with OECD Pillar 2 requirements.
Changes to VAT
- 4% reduced rate: Fermented milk will now be taxed at the super-reduced rate, benefiting both consumers and producers.
- Anti-fraud measures on fuels: Owners of tax warehouses must guarantee VAT payment before fuels leave their facilities. Joint liability and mandatory monthly declarations are also introduced.
- Extension of special regimes: Simplified regimes and modules will remain in place for 2025, providing stability for sectors like agriculture, livestock, and fisheries.
Other Notable Measures
- Refunds to mutual fund members: Procedures are established for refunds corresponding to tax years 2019-2022, as per Supreme Court rulings.
- Electronic invoicing: Private platforms must submit copies of all issued invoices to the public solution, ensuring greater transparency and data protection.
- Tourist rentals: Efforts are underway to harmonize VAT within the EU, enabling taxation of short-term rentals in areas facing tourism saturation or housing access challenges.
These measures, effective January 1, 2025, aim to improve tax system sustainability, combat fraud, and foster balanced economic growth.
