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Main tax changes introduced by Royal Decree-Law 20/2022, of December 27, on measures to respond to the economic and social consequences of the war in Ukraine and to support the reconstruction of the island of La Palma and other situations of vulnerability

PERSONAL INCOME TAX (IRPF)

With effect from January , the following amendments are introduced to Law 35/2006 of 28 November on Personal Income Tax:

Deduction for maternity

A new thirty-seventh transitional provision is added to the LIRPF by article 73 of Royal Decree-Law 20/2022:

Where in the 2022 tax period the parent would have been entitled to the maternity deduction and the child support supplement provided for in Law 19/2022 in relation to the same descendant, the maternity deduction may continue to be applied from 1 January 2023, even if one of the parents was entitled to the aforementioned supplement in respect of said descendant, provided that the rest of the requirements established in the regulations in force from 1 January 2023 are met.

VALUE ADDED TAX

The following amendments are introduced in Law 37/1992, of December 28, on Value Added Tax (LIVA):

Natural gas, briquettes, pellets and firewood

With effect from January 1, 2023 and valid until December 31, 2023 , the VAT rate of 5 percent of VAT will be applied to deliveries , intra-community imports and acquisitions of natural gas, briquettes and pellets from biomass and wood for firewood .

The rate of the equivalence surcharge applicable, during the time period mentioned in the previous section, to deliveries of briquettes and pellets from biomass and to firewood will be 0.625 percent.

Masks, In Vitro Diagnostics and Sars Cov-2 vaccines

With effect from January 2023, the First Additional Provision of Royal Decree-Law 29/2021, of 21 December, adopting urgent measures in the energy field to promote electric mobility, self-consumption and the deployment of renewable energies, is amended with the effects:

  • The application of the tax rate of 4 percent of VAT to intra-community deliveries, imports and acquisitions of disposable surgical masks referred to in the Agreement of the Interministerial Commission on Drug Prices, of November 12, 2020, provided for in article 7 of Royal Decree-Law 34/2020, of November 17, on urgent measures to support business solvency and the energy sector, and in tax matters, is extended until June 30, 2023.

  • The application of the 0 percent VAT tax rate to intra-community deliveries, imports and acquisitions of certain goods and services necessary to combat the effects of SARS-CoV-2, as well as for the purposes of the special regime of the equivalence surcharge ( 0 percent equivalence surcharge ), provided for in the seventh Final Provision of Royal Decree-Law 35/2020, of December 22, is extended until June 30, 2023. These are medical devices for in vitro diagnostics of SARS-CoV-2, vaccines against SARS-CoV-2 authorized by the European Commission and related transport, storage and distribution services.

Electric power

With effect from July 1, 2022 and valid until December 31, 2023 , the 5 percent VAT rate will be applied to deliveries , imports and intra-community acquisitions of electrical energy carried out in favor of:

  1. Holders of electricity supply contracts, whose contracted power (fixed power term) is less than or equal to 10 kW , regardless of the supply voltage level and the contracting modality, when the arithmetic average price of the daily market corresponding to the last calendar month prior to the last day of the billing period has exceeded €45/MWh.

  2. Holders of electricity supply contracts who are recipients of the electricity social bonus and have been recognized as severely vulnerable or severely vulnerable at risk of social exclusion, in accordance with the provisions of Royal Decree 897/2017, of October 6, which regulates the figure of the vulnerable consumer, the social bonus and other protection measures for domestic consumers of electricity.

Food

With effect from January 1, 2023 and valid until June 30, 2023 :

  1. The 5 percent VAT rate will be applied to intra-community deliveries, imports and acquisitions of the following products:

    1. The olive and seed oils .

    2. The pastas .

    The rate of the equivalence surcharge applicable to these operations will be 0.625 percent. However, the applicable tax rate will be 10 percent from May 1, 2023, if the annual rate of underlying inflation for March, published in April, is less than 5.5 percent. In this case, the rate of the equivalence surcharge applicable to these operations will be 1.4 percent.

  2. The 0 percent VAT rate will be applied to intra-community deliveries, imports and acquisitions of the following products:

    1. common bread , as well as frozen common bread dough and frozen common bread intended exclusively for the production of common bread.

    2. The baking flours .

    3. The following types of milk produced by any animal species: natural, certified, pasteurized, concentrated, skimmed, sterilized, UHT, evaporated and powdered.

    4. The cheeses .

    5. The eggs .

    6. The fruits, vegetables, legumes, tubers and cereals , which have the status of natural products in accordance with the Food Code and the provisions issued for its development.

    The rate of the equivalence surcharge applicable to these operations will be 0 percent.

    However, the applicable tax rate will be 4 percent from May 1, 2023, if the annual rate of underlying inflation for March, published in April, is less than 5.5 percent. In this case, the rate of the equivalence surcharge applicable to these operations will be 0.5 percent.