Accrued taxes and tax revenues

In 2020, the taxes accrued decreased by 9.1% (Table 1.4). For the four main tax groups, the drop was somewhat smaller, at 8.7% (Table 1.3). The rate is similar to that recorded by tax revenues (-8.8%). The conceptual differences separating these measures were eliminated in 2020 (change from accrual to cash in Chart 1.17). It should be noted that, with respect to accrual, the variation in cash income was positively affected by the impact of regulatory and management changes (in particular by the extraordinary refunds made in 2019), but negatively affected by the payment of the high number of refund requests that had been submitted in that year and were made in 2020.

As just mentioned, one of the reasons why revenues moved at a different pace than that observed in accrued taxes, and in general from the path followed by activity and consumption indicators, was the impact that regulatory and management changes had in 2020. These influenced the rate of variation in income for the year as a whole (their effect was estimated at 2.94 billion, 1.4 points of growth), but above all they affected its distribution within the year given that the most relevant ones consisted of the deferral of payment.

When analysing regulatory and management measures, the first thing to do is to separate two clearly differentiated blocks. On the one hand, this would include measures unrelated to COVID, which were mostly pre-dated by the outbreak. The impact of this group of measures was positive, amounting to almost €4 billion. On the other hand, there are various measures that have been taken since mid-March, most of them with the aim of limiting the effects of the pandemic on taxpayers' obligations. Together, these measures reduced tax revenue by just over 1 billion euros. The characteristic of these other measures was that in many cases they involved the postponement or delay of payment, so that their impact was very uneven throughout the year, resulting in a loss of income of more than 4.3 billion in the first months after they came into force, with the impact gradually moderating in subsequent months as these deferred obligations were paid.

As regards measures unrelated to COVID, many of them are not impacts specific to 2020, but to 2019, but they must be taken into account as they affect the rate of change between the two years. This situation applies to refunds for maternity benefits in personal income tax, those arising from rulings in corporate tax and in inheritance and gift tax, and payments for DTA (Deferred Tax Assets) also in companies. All of them were carried out in an extraordinary manner in 2019, negatively altering the comparison with the previous year and vice versa in 2020. Other impacts, although they occurred in 2020, were also a consequence of previous decisions. This was the case of the effect in 2019 on the annual personal income tax rate of the settlement of the tax associated with maternity benefits paid in 2018 (before the ruling) and the extension of family deductions (started in 2018, but completed in the 2019 declaration submitted in 2020); from the increase in revenue from the recovery of the Tax on the Value of Electric Energy Production; the increase in the collection of the Hydrocarbon Tax due to the transfer to 2020 of part of the income derived from the change in the regional rate that took place in 2019; and the losses from the Lottery Tax when the exemption threshold was raised. In addition, extraordinary income and refunds were recorded in Corporate Tax due to judgments issued in 2020; In the first case the amount was 1,081 million and in the second case 406 million (the interest generated by the declaration of unconstitutionality of RDL 2/2016 which modified the way of calculating the fractional payments).

The measures approved to combat the consequences of COVID can be grouped into three types. Firstly, there are measures aimed at facilitating compliance with tax obligations. This group includes the delay in the submission of self-assessments from April 15 to May 20 for companies with a turnover of less than 600 thousand euros (RDL 14/2020); the granting of deferrals to companies with a volume of operations not exceeding 6 million euros and tax debt of less than 30 thousand euros (RDL 7/2020), to those with debts derived from customs declarations (except VAT; RDL 11/2020) and taxpayers awaiting the granting of the financing included in RDL 8/2020 (RDL 15/2020); and the suspension of deadlines for tax debts (RDL 8/2020 and RDL 15/2020), derived, among others, from the expiration of the deferral and fractionation agreements granted prior to the state of alarm (deadlines that, in times of strict confinement, with the closure of offices, could be difficult to meet). In all three cases, payments are deferred by taxpayers. The initial impact of these measures therefore faded over the months. The first measure (delay in filing self-assessments) was, in this sense, an extreme case: The negative impact occurred in April and was fully recovered in May. In the other two (deferrals and suspension) the initial impact (2,584 million and 1,629, respectively) was reduced as the deferred amounts were paid, especially in the months of October and November, coinciding with the end of the six-month period granted. Not all amounts were recovered in the year, so the annual impact was negative.

In this regard, it should be clarified that the figure for deferrals mentioned above (2,584 million) does not strictly correspond to those requested under RDLs 7, 11 and 15 (worth 2,511 million) as it also includes other deferrals which, without complying with the conditions of these RDLs, were classified as extraordinary in nature with respect to the normal evolution of the series. For practical purposes, the difference between considering one or the other figure is not very important, especially considering that the recovery rate of the two types of deferrals was similar (up to the end of the year, approximately 92% of the amounts involved in the deferrals granted had been recovered).

The second type of measures were those aimed at reducing the split payments made by small businesses. This was done through two channels. The first was the possibility of changing the method of settlement of fractional payments, an option that was approved in RDL 15/2020. This RDL allowed, on the one hand, to apply direct estimation in the Personal Income Tax in 2020 without preventing the return to the objective estimation in 2021, and, on the other, in the Corporate Tax to be taxed according to the profits actually obtained instead of doing so according to the last annual quota submitted. In the latter case, taxpayers with a trading volume of less than 600 thousand euros were eligible for the first payment, and from the second payment onwards, those with a trading volume of less than 6 million were also eligible. The second route was the elimination in the objective estimation of the calculation as days of exercise of the activity, of the calendar days in which the state of alarm had been declared (RDL 15/2020).

And the third type of measures were those related to VAT, which were presented in three forms: possibility of changing the method of settlement and eliminating the days in a state of alarm for taxpayers under the Simplified Regime (RDL 15/2020), similar to taxpayers in the objective estimation of personal income tax; application of the zero rate on deliveries, imports and intra-community acquisitions of goods necessary to combat the effects of COVID whose recipients are public entities, clinics and hospitals or private entities of a social nature (RDL 15/2020; initially from April 22 to July 31, although it was later extended); and the reduction of the rate to 4% for digital books, newspapers and magazines (RDL 15/2020). Other VAT rate reductions were also approved (to 4% for surgical masks when the recipient is different from those who benefit from the 0% rate), but due to their approval date (RDL 34/2020, of December 17 November) its effects only began to be noticed in income in 2021.

Breaking down the tax accrued and the income by figures, in 2020 the IRPF accrued was practically the same as in 2019 (+0.1%; Table 2.1). The slight fall in household income was offset by the increase in the effective rate, an increase that was due more to changes in the composition of the tax than to the effect of regulatory measures, which, in terms of accrual, had barely any impact.

Withholdings on income from work and economic activities grew by 1% (Table 2.3). The growth was the same as in salaries, although with a clear difference between private (which fell by 1.8%) and public (which increased by 8.1%, more than in 2019). In pensions, growth in 2020 was also higher than that recorded in 2019 (5.1% vs. 4.9%). Capital withholdings, for their part, decreased by 18.1% in 2020 (Table 2.1). Of these, withholdings on capital gains (linked to the evolution of dividends) decreased by 23.9% and withholdings on leases (mainly premises) fell by 12.1%, while withholdings derived from capital gains obtained in investment funds increased by 14.3%. Finally, split payments lost 13.3%. These payments were affected by the regulatory measures aimed at modular entrepreneurs (possibility of changing the modality, elimination of the calculation of earnings for days in a state of alarm, general reduction of 20% and special reduction of 35% for some activities). Its impact is estimated at 87 million.

Income from personal income tax reached 87,972 million in 2020, 1.2% more than in 2019. Revenues benefited from the comparison with 2019, when most of the refunds related to maternity benefits were made. Together, this and other measures contributed almost 1.1 billion (Table 1.5) to the increase in revenue, so that, without them, the growth in revenue would have been close to zero, similar to that of the accrued tax. There were items that performed well, such as public withholdings (salaries and pensions), the result of the annual declaration and, although with a marginal contribution, withholdings from investment funds. The rest of the income (withholdings from work in the private sector, installment payments from personal companies, withholdings from income from movable capital and from leases) decreased as a consequence of the general situation.

In 2020, the Corporate Tax accrued decreased by 21.6% (Table 3.1). Most of the tax comes from split payments, which fell by 25.4%. The fall was greater in consolidated groups (-37.6%) due, on the one hand, to their worse results and, on the other, to the importance that the minimum payment on profits usually has in these companies. In the rest, payments from large companies not belonging to groups fell by 15.7% and those from SMEs by 5.1%.

Corporate tax revenues fell to €15.858 billion, 33.2% less than in 2019. A third of the drop in revenue was due to the management of returns and other elements outside the evolution of profits. In 2020, the refunds for the 2018 financial year were made, which were very high due to the high fractional payments that were made at that time. Furthermore, in 2019 the rate of returns was lower than usual (Table 3.3). If this negative impact is corrected, together with the positive impact provided by some extraordinary income and the one caused by the comparison with 2019, in which there were extraordinary returns (Table 1.5), the decrease would be around 23%, more in line with the tax accrued.

The VAT accrued in the period fell by 13.6% in 2020, slightly more than the subject expense, given the slight decrease that occurred in the effective rate (Table 4.1). Gross VAT was reduced by 10.8%, but refund requests fell at a much lower rate (-2.9%), due to the increase in annual refund requests submitted by the group of taxpayers most strongly affected by the crisis caused by the pandemic. The smaller decrease in refunds explains the greater drop in net VAT.

VAT collection decreased by 11.5%, to 63,337 million (Table 4.2). The fall was less intense than in the VAT accrued, due, on the one hand, to the fact that the collection of the first quarter of 2020 and part of that of the second corresponds to accruals that were not yet affected by the COVID crisis and, on the other, to the increase in income associated with the greater deferrals requested.

The Excise Taxes accrued were 13.3% lower than in 2019 (Table 5.1). All figures decreased. The Hydrocarbon Tax lost 17% of what was accrued a year earlier (Table 5.5). The behaviour of each of the main products allows us to see the different degree to which they were affected by the drop in activity and the limitations on mobility: -20.9% in gasoline (linked to consumption), -17.2% in automotive diesel (more related to transport) and +0.8% in subsidized diesel (agricultural and fishing work, and heating). The Tax on Tobacco Products decreased by 4.2% (Table 5.6), with the fall concentrated in cigarettes (-5.4%; (In other jobs, the tax increased by 5.5%). The Electricity Tax fell by 9.7% (Table 5.7). Its evolution was similar to that of hydrocarbons, following the rhythm of the restrictions, but always with more moderate falls, even despite the decrease in prices, due to its greater link with household consumption. The drop in alcohol taxes was very pronounced: -30.4% in the Tax on Alcohol and Derived Beverages (Table 5.2) and -12% in the Tax on Beer (Table 5.3). The reasons for these declines are found in the capacity limitations in the hospitality and catering industry and in the restrictions on mobility that have been established, to varying degrees, since the first state of alarm began. The Coal Tax was reduced again, this time by 57.5%, although its fall had nothing to do with the situation caused by the pandemic, but, as already happened in 2019, with the abandonment of coal as a raw material in electricity generation.

Special Tax collection fell to 18.79 billion, 12.1% below the revenue recorded in 2019. They decreased slightly less than the accrued tax thanks to the change from the accrual period to the cash period (this includes positive data from 2019 and not the last negative data from 2020, which are carried over to 2021). Regulatory and management measures (the remains of the regional rate on the Hydrocarbon Tax and those approved to facilitate compliance with tax obligations) barely provide a few million.

Revenue from figures other than the four main figures amounted to €8.095 billion in 2020, 12.6% below the figure collected in 2019. Except for environmental taxes and inheritance and gift tax (other revenues in Chapter I), both cases affected by regulatory or management changes in 2019, revenues decreased in the rest of the figures. In the Non-Resident Income Tax the drop was 36.2%. These revenues had already declined in 2019, but the general economic situation and the decline in dividends in particular caused the losses to become more pronounced. The environmental taxes (Table 6.2) increased by 37.1%, although this was exclusively due to the lower collection in 2019 as a result of RDL 15/2018, which temporarily eliminated the Tax on the Value of Electrical Production in the fourth quarter of 2018 and the first of 2019, both quarters of which should have been collected in that year. This is why this figure, the most important in terms of taxation classified as environmental, grew by 59.7%. The revenue (1.146 billion) was, however, much lower than what was normal years before (close to 1.5 billion). For the third consecutive year, revenue from the Tax on Fluorinated Gases was also below the figure obtained in the previous year (-16.7% in 2020). As for other figures in Chapter II, in Taxes on Foreign Trade (Table 6.3) revenues decreased by 16.2%, in line with the drastic reduction suffered by international trade, and in Tax on Insurance Premiums (Table 6.4) they remained practically the same as in 2019 (-0.3%), favored by the advancement of some operations to 2020 (to avoid the increase in the rate in force since 2021), which offset the fall in the rest of the year. As for the income of Chapter III , it fell by 21.2% (Table 0), with falls of 33.3% in rates and 10.5% in other income. The first had basically two causes (Table 6.6): the lower production of electricity from hydraulic sources in 2019 (Fee for the use of continental waters for the production of electricity) and management problems, some of them a consequence of the measures taken to combat the pandemic (Radioelectric Tax, Tax on the Issuance of DNI and Passports and Telecommunications Tax).