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PERSONAL INCOME TAX (IRPF)

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General scale of personal income tax

With effect from 1 January 2021, the scale applied to the part of the general taxable base to determine the full state rate is modified, adding a new bracket to the part of the taxable base that exceeds 300,000 euros to which a rate of 24.50% will be applied.

The new general scale applicable is as follows:

Net tax base Up to euros	Total tax liability Euros	Remainder of tax base Up to euros	Applicable rate Percentage
0.00	0,00	12,450.00	9.50
12,450.00	1,182.75	7,750.00	12.00
20,200.00	2,112.75	15,000.00	15.00
35,200.00	4,362.75	24,800.00	18.50
60,000.00	8,950.75	240,000.00	22.50
300,000.00	62,950.75	From there on	24.50

(Article 63.1 of the LIRPF is modified by article 58 of the LPGE for 2021).

Savings tax rates in personal income tax

With effect from 1 January 2021, the scale applied to the part of the savings taxable base to determine the full state rate is modified, adding a new bracket to the part of the savings taxable base that exceeds 200,000 euros to which a rate of 13.00% will be applied.

The new scale applicable to the taxable base of savings is as follows:

Liquidable base of savings Up to euros	Total tax liability Euros	Remainder tax base of savings Up to euros	Applicable rate Percentage
0	0	6,000	9.5
6,000.00	570	44,000	10.5
50,000.00	5,190	150,000	11.5
200,000.00	22,440	From there on	13.00

Likewise, the scale applicable to the taxable base of savings to determine the full regional quota is also modified in the same terms indicated.

The scale applicable in this case will be the same one reproduced above.

The scale applied to the savings portion of the taxable base to determine the full state rate is modified in the case of those taxpayers who have their habitual residence abroad due to any of the circumstances indicated in articles 8.2 and 10.1 of the LIRPF. In this case, a new section is added to the part of the taxable base of savings that exceeds 200,000 euros to which a rate of 26.00% will be applied.

Thus, in this case, the scale applicable to the taxable base of savings will be the following:

Liquidable base of savings Up to euros	Total tax liability Euros	Remainder tax base of savings Up to euros	Applicable rate Percentage
0	0	6,000	19
6,000.00	1,140	44,000	21
50,000.00	10,380	150,000	23
200,000.00	44,880	From there on	26

(Articles 66 and 76 of the LIRPF are modified by article 59 of the LPGE for 2021).

Scale of withholdings and payments on account applicable to recipients of employment income

With effect from 1 January 2021, the scale applicable to determine the withholding percentage to be applied to income from work derived from employment or statutory relationships and pensions and passive assets has been modified. A new section is added to the base part to calculate the withholding rate that exceeds 300,000 euros to which a withholding rate of 47.00% will be applied.

Thus, the scale to apply to determine the type of retention will be as follows:

Base for calculating the withholding rate Up to euros	Withholding quota Euros	Rest of base for calculating the withholding rate Up to euros	Applicable rate Percentage
0.00	0.00	12,450.00	19.00
12,450.00	2,365.50	7,750.00	24.00
20,200.00	4,225.50	15,000.00	30.00
35,200.00	8,725.50	24,800.00	37.00
60,000.00	17,901.50	240,000.00	45.00
300,000.00	125,901.50	From there on	47.00

(Article 101.1 of the LIRPF is modified by article 60 of the LPGE for 2021).

Scales applicable to workers posted to Spanish territory

In the special tax regime provided for in article 93 LIRPF for workers posted to Spanish territory, with effect from January 1, 2021, the applicable rates for determining the full rate are modified. There are two cases:

First, the following scale is applied to the taxable base, except for the part thereof corresponding to dividends, interest or other income obtained from the transfer to third parties of own capital and capital gains that are revealed on the occasion of the transfer of assets:

Net tax base Euros	Applicable rate Percentage
Up to 600,000	24
From 600,000.01	47

(Previously, the percentage applicable to the taxable base from 600,000 euros was 45%).

Second, the following scale is applied to the portion of the taxable part that corresponds to dividends, interest or other income obtained from the transfer to third parties of own capital and capital gains that are revealed on the occasion of the transfer of assets:

Liquidable base of savings Up to euros	Total tax liability Euros	Remainder tax base of savings Up to euros	Applicable rate Percentage
0	0	6,000	19
6,000.00	1,140	44,000	21
50,000.00	10,380	150,000	23
200,000.00	44,880	From there on	26

(A new section is created for the taxable base starting at 200,000 euros, to which a rate of 26% will be applied).

Likewise, in this special regime -with effect from January 1, 2021- the percentage of withholding or payment on account of employment income is modified. Specifically, when the remuneration paid by the same payer of employment income during the calendar year exceeds 600,000 euros, the withholding rate applicable to the excess will be 47 percent (previously it was 45 percent).

(Article 93 of the LIRPF is modified by article 61 of the LPGE for 2021).

Limits on reduction in the tax base of contributions to social security systems

With effect from 1 January 2021, various limits relating to social security systems have been modified.

Private insurance that exclusively covers the risk of severe or high dependency:

The total reductions made by all persons who pay premiums in favour of the same taxpayer, including those of the taxpayer himself, may not exceed 2,000 euros per year (previously the limit was 8,000 euros per year).

Contributions to social security systems in which the taxpayer's spouse is a participant, member or holder:

Taxpayers whose spouse does not earn net income from work or economic activities, or whose income is less than 8,000 euros per year, may reduce the tax base for contributions made to social security systems in which said spouse is a participant, member or holder.

These contributions will have a maximum limit of euros year (previously the limit was 2,500 euros).

Joint maximum limit:

As a joint maximum limit for contributions to social security systems, the lowest of the following amounts shall apply:

1. 30% of the sum of net earnings from work and economic activities received individually during the fiscal year.

2. 2,000 euros per year (previously the limit was 8,000 euros)

   From 1 January 2021, this limit will be increased by €8,000, provided that such increase comes from employer contributions.

   The individual entrepreneur's own contributions to employment pension plans or social welfare mutual funds, of which he is in turn the promoter and participant or mutual member, as well as those made to company social welfare plans or collective dependency insurance of which he is in turn the policyholder and insured, will be considered as company contributions, for the purposes of calculating this limit.

   In addition, the limit of 5,000 euros per year for premiums for collective dependency insurance paid by the company, which already existed previously, is maintained.

(Articles 51.5 and 7 and 52 of the LIRPF are modified by article 62 of the LPGE for 2021).

Extension of the exclusionary limits of the objective estimation method

The quantitative limits that have been applied in previous years and that delimit the scope of application of the objective estimation method for economic activities included in the scope of application of said method are extended for the 2021 financial year, with the exception of agricultural, livestock and forestry activities, which have their own quantitative limit based on income volume.

Therefore, the general exclusion magnitudes for the year 2021 will be the following: 

• Volume of income in the immediately preceding year exceeding 250,000 euros for all economic activities, except agricultural, livestock and forestry. All the operations shall be taken into account, irrespective of whether there is a duty to issue an invoice. Transactions requiring an invoice to be issued when the recipient is a business may not exceed 125,000 euros.

• Turnover for the set of agricultural, forestry and livestock activities exceeding 250,000 euros.

• Volume of purchases of goods and services in the immediately preceding year, excluding acquisitions of fixed assets, greater than 250,000 euros. 

(DT 32 of the LIRPF is modified by article 63 of the LPGE for 2021).

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CORPORATION TAX

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Limitation of the deductibility of financial expenses

With effect for tax periods beginning on or after 1 January 2021 that have not ended upon the entry into force of this Law and for an indefinite period, the regulation of the limitation on the deductibility of financial expenses is modified, establishing that for the determination of operating profit the addition of financial income from participations in equity instruments that correspond to dividends will not be taken into account, when the acquisition value of said participations is greater than 20 million euros.

(Article 16.1 of Law 27/2014 of 27 November on Corporation Tax has been amended).

Exemption on dividends and income derived from the transfer of securities representing the equity of resident and non-resident entities

Applies to tax periods starting on or after 1 January 2021 that have not yet ended on the date on which this Law enters into force and is in force indefinitely:

• The exemption on dividends and income derived from the transfer of securities representing the equity of resident and non-resident entities is modified, establishing that dividends or participation in the profits of entities will be exempt when the requirement is met that the percentage of participation, direct or indirect, in the capital or in the equity of the entity is at least 5 percent, eliminating the alternative requirement that the acquisition value of the participation be greater than 20 million euros.

  (The first paragraph of paragraph 1.a) and paragraph 6.a) of Article 21 of Law 27/2014 of 27 November on Corporation Tax have been amended).

• The amount that will be exempt will be 95 percent of said dividend or income . Management expenses related to such participations will not be deductible from the taxpayer's taxable profit, and their amount will be set at 5 percent of the dividend or positive income obtained.

  This limitation will NOT apply to companies with a net asset value of less than 40 million euros and which are not part of a business group, for a period limited to three years, when they come from a subsidiary, resident or not in Spanish territory, established after 1 January 2021.

  (Paragraphs 10 and 11 have been added to Article 21 of Law 27/2014 of 27 November on Corporation Tax). 

• The regulation establishing that dividends or profit shares will not be included in the tax base in the part that corresponds to the positive income that has been included in the tax base is modified, incorporating that for these purposes , the amount of dividends or profit shares will be reduced by 5 percent as management expenses related to said shares, unless the circumstances established in section 11 of article 21 of this Law occur. 

  (Article 100.10 of Law 27/2014 of 27 November on Corporation Tax has been amended).

• On the other hand, the regulation that establishes that in order to calculate the income derived from the transfer of the participation, direct or indirect, the acquisition value will be increased by the amount of the social benefits that, without effective distribution, correspond to income that would have been attributed to the partners as income from their shares or participations in the period of time between their acquisition and transfer is modified incorporating, for these purposes , that the amount of the social benefits referred to in this paragraph will be reduced by 5 percent as management expenses related to said participations.

  (Article 100.12 of Law 27/2014 of 27 November on Corporation Tax has been amended).

• The transitional tax regime for shares with an acquisition value greater than 20 million regulated.

  (Transitional provision 40 has been added to Law 27/2014 of 27 November on Corporation Tax).

International double taxation: dividends and shares in profits

With effect for tax periods beginning on or after January 1, 2021, which have not concluded upon the entry into force of this Law and indefinite validity , in relation to the deduction to avoid international economic double taxation: dividends and shares in profits

• In the regulation contained in the LIS, where it is established as a requirement for the application of this deduction that the direct or indirect participation in the capital of the non-resident entity be at least 5 percent , the alternative requirement that the acquisition value of the participation be greater than 20 million euros is eliminated .

  (Article 32.1.a) of Law 27/2014 of 27 November on Corporation Tax has been amended).

• On the other hand, it is added that, in order to calculate the full share the dividends or shares in the profits will be reduced by 5 percent as management costs related to said shares . This reduction shall not apply in the case of dividends or shares in profits in which the circumstances set out in Article 21.11 of this Law apply. Any excess over the above-mentioned limit will not be fiscally deductible, notwithstanding the provisions of Article 31.2 of this Law.

  (Article 32.4 of Law 27/2014 of 27 November on Corporation Tax has been amended).

• A second paragraph is added which establishes that ## the amounts that must be included in the individual tax bases by application of the provisions of section 10 of article 21 of this Law will not be subject to elimination.

  (Article 64 of Law 27/2014 of 27 November on Corporation Tax has been amended).

Deduction for investments in Spanish productions of feature films and short films and series

In relation to the deduction for investments in Spanish productions of feature films and short films and audiovisual fiction, animation or documentary series:

• It is established that for the application of this deduction the required certificates are binding for the AEAT regardless of their date of issue. On the other hand, a section 7 is created in article 39 of Law 27/2014 by which the application of the deduction of sections 1 and 3 of article 36 of Law 27/2014 is extended to taxpayers who participate in the financing of said productions.

  (The thirty-first Final Provision of the General State Budget Law for 2021 modifies letter a´) of section 1 of article 36 of Law 27/2014 on Corporate Income Tax).

• It is established that the increased limit of the deduction to 50% also applies (in addition to R&D&I) to the deductions of cinematographic productions , audiovisual series and live shows of performing and musical arts when these deductions exceed 10% of the total quota reduced by the deductions to avoid international double taxation and bonuses.

  (The Thirty-first Final Provision of the General State Budget Law for 2021 also modifies sections 1 and 5 of article 39 of Law 27/2014, on Corporate Income Tax).

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VALUE ADDED TAX

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Amendments introduced into Law 37/1992 of 28 December 1992 on VAT by the General State Budget Law for 2021: 

Location of service provision: effective use rule

Article 68 of the LPGE for 2021 establishes that, with effect from January 1, 2021 and indefinite validity, article 70 is modified. Two LIVA, to stop applying the special rule of effective use to services that are understood to be performed , in accordance with the localization rules, in the Canary Islands, Ceuta and Melilla.

(Article 70 of Law 37/1992, of 28 December, on Value Added Tax has been amended).

Tax rate applicable to beverages containing added sweeteners

Article 69 of the LPGE 2021 establishes that, with effect from January 1, 2021 and indefinite validity, article 91.one.1.1 LIVA is modified, increasing the tax rate applicable to soft drinks, juices and sodas with added sugars or sweeteners, which go from being taxed at 10 percent to 21 percent .

(Article 91.1.1 of Law 37/1992, of 28 December, on Value Added Tax has been amended).

Limits for the application of the simplified regime and the special agriculture, livestock and fishing regime

Article 70 of the LGPE 2021 establishes that, with effect from January 1, 2021 and indefinite validity, the thirteenth transitional provision LIVA is modified in order to extend for the period 2021 the limits for the application of the simplified regime and the special regime for agriculture, livestock and fishing. 

More information: 

Who does the simplified VAT regime apply to?

Who is applicable for the special regime for agriculture, livestock farming and fishing?

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WEALTH TAX

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Scale of Wealth Tax levies

Effective 1 January 2021, the scale applied to the net tax base has been amended, with the rate applicable to the last bracket now 3.5% (previously 2.5%).

Thus, the new scale applicable is as follows:

Net tax base Up to euros	Tax payable Euros	Remainder of tax base Up to euros	Applicable rate Percentage
0.00	0.00	167,129.45	0.2
167,129.45	334.26	167,123.43	0.3
334,252.88	835.63	334,246.87	0.5
668,499.75	2,506.86	668,499.76	0.9
1,336,999.51	8,523.36	1,336,999.50	1.3
2,673,999.01	25,904.35	2,673,999.02	1.7
5,347,998.03	71,362.33	5,347,998.03	2.1
10,695,996.06	183,670.29	From there on	3.5

(Article 30 of the Wealth Tax Law has been amended by Article 66 of the General State Budget Law for 2021).

Indefinite nature of Wealth Tax

Following the repeal of the second section of the sole article of Royal Decree-Law 13/2011, of September 16, by which the Wealth Tax is reestablished, on a temporary basis, the indefinite nature of the Wealth Tax is reestablished.

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ECONOMIC ACTIVITIES TAX

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Effective the tax periods starting from the entry into force of this Law and in force indefinitely, Royal Legislative Decree 1175/1990, of 28 September, approving the Rates and Instruction of the Tax on Economic Activities, has been amended as follows:

• ## The marketing activities of general supplies (electricity and gas) are specifically classified:

  • The title of Group 15 of the First Section of the Rates is modified by introducing marketing and is worded as follows: Grouping 15. Production, transportation, distribution and marketing of electricity, gas, steam and hot water.

  • The title of group 151 , of Group 15, of the First Section of the Rates is modified, adding marketing. It is worded as follows: Group 151. Production, transportation, distribution and marketing of electrical energy.

  • A new section is added, within group 151 of Group 15, of the First Section of the Rates: Heading 151.6. Marketing of electricity.

  • group 152 of Group 15 of the First Section of the Tariffs is modified (incorporating marketing) and is worded as follows: Group 152 Manufacturing, distribution and marketing of gas.

  • In addition, two new headings have been introduced in Group 152:

    • Heading 152.1. Production and Distribution of Gas.

    • Heading 152.2. Marketing of Gas.

• A section is created for large commercial areas that are not primarily dedicated to clothing or food and which until now lacked their own section. They are treated in a similar way to other shopping centres under Group 661, "Integrated mixed or large retail trade":

  • A new heading is added in group 661 , of the First Section of the Rates, which is worded as follows:

    Heading 661.9 . Other integrated mixed or large trade, considered as trade carried out in a specialised way at establishments with a useful surface for the exhibition and sale of goods to the public of equal to or more than 2,500 m², such as those related to DIY and household equipment, domestic and office furniture, electronic devices and household appliances, automotive items, sports or others items. 

    Note: The useful area for exhibition and sale to the public shall be understood as that in which articles are displayed for direct sale, whether covered or not and effectively usable by the consumer.

  • Common note 2 to group 661 the First Section of the Rates is modified, introducing large surface area, which is worded as follows:

    2. For the purposes of calculating the quotas for this group, the entire surface area of the establishment (department store, hypermarket, popular store or other large store ) will be taken into account, including areas designated for offices, covered parking, warehouses, etc. Likewise, areas occupied by third parties by virtue of transfer of use or any other title will be taken into account. However, uncovered surfaces will not be counted for any purposes.

• A new section is added in group 664 , of the First Section of the Tariffs, for the new activity of supplying energy to electric vehicles through charging points installed anywhere, whether on public roads, gas stations, public and private garages or in any other location, with the following wording:

  Section 664.2. Electric vehicle charging points .

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