Effective rates

effective rate on income and expenditure remained virtually at the same level as in 2017. There were some regulatory changes in 2018, but they were offset by the evolution of bases and prices. The average rate has remained almost unchanged at around 15% since 2013.

The effective rate on gross household income also remained stable in 2018 (Table 2.1). Stability hides three elements that affected the rate in 2018 and that are of different signs, one upward and two downward. First, the average withholding rate on salaries and pensions increased by 1% in the first case and 2.2% in the second (Table 2.3). In terms of wages, the result contrasts with the stability of the previous two years, following the tax reform. The reason for this change is the increase in average wages (also unlike previous years) and the effect this had on the average withholding rate. In pensions, the rate increase is part of the normal evolution when pensioners with a higher average pension and rate join the system. However, and this is the second element, both increases were limited in the second half of the year, after the approval of the Budget, when the reduction for work income was extended with the consequent reduction in the rate for lower salaries and pensions. Finally, a third element that had a downward influence on the rate was the new family deductions, the full effect of which will only be seen in the annual declaration (the extension of the old family deductions only had a small effect on the advance deductions in 2018 and others, such as childcare expenses, can only be applied in the annual declaration). This last element explains why, although the average rate did not grow in 2018, the estimated rate did grow (by 1%) without including the differential rate and family deductions.

The effective corporate tax rate in 2018 was 21.3% on the aggregate tax base and 9.9% if calculated on the positive accounting result. In both cases, this represents an increase compared to 2017 which, in the absence of regulatory changes, as is the case, should be attributed to composition effects (the bases of companies with the highest effective rate grow more). In any case, the rate in 2018 is not far from the average of the last 10 years.

In VAT there were also no significant regulatory changes (only the reduction of the rate in cinemas and for half a year) so the average rate remained close to 15.3%, which is the level reached after the last rate increases. general and reduced in September 2012.

In the case of Special Taxes (II.EE.), the variation in the rate observed in 2018 is related, as happened in 2017, to the rise in energy prices. It should be remembered that, in order to obtain an aggregate average rate, the rate of the II.EE. In this section, it is calculated on the value of consumption, although in some of these figures (especially in the Tax on Hydrocarbons) the basis is physical consumption, not the value. It was precisely in the Tax on Hydrocarbons where the only regulatory changes occurred, albeit of marginal amount. These changes were derived from the approval of Royal Decree-Law 15/2018, of urgent measures for the energy transition and consumer protection, which included the elimination of the tax on natural gas, diesel and fuel oil used in the generation of electric energy.