On December 24, 2022, Law 31/2022, the General State Budget Law for the year 2023, was published in the Official State Gazette (BOE).

These budgets introduce many new features, however, most of them will be noticed when we have to file the self-declarations for the 2023 fiscal year, i.e. in 2024.

The Confialia tax team has decided to prepare this publication so that you can keep up to date with all the tax news for 2023.

In addition to those that affect the different taxes that make up our tax system, it is worth mentioning some measures that will affect our day-to-day life as of January 1, in addition to a temporary reduction in VAT rates:

• The extension until 12/31/2023 of the limit of the 2% increase in housing rents when linked to the CPI; also included is the 6-month extension of those contracts that end before 6/30/2023.
• Disappearance of the 20.00 cents bonus on fuel prices.
• The tax on the deposit of waste in landfills, incineration and co-incineration of waste is created. We will be waiting to see how companies, both public and private, pass on this new cost.
• The special tax on non-reusable plastic packaging is created. As in the previous point, we will see how much of this new tax is passed on to the end consumer and how much is borne by the manufacturers and importers of this type of products.
• As a curiosity, the legal interest rate of money increases: it will be fixed for 2023 at 3.25% (3% in 2022), i.e., we will pay more for the deferral of tax debts.
• The late payment interest rate increases: it will be fixed for 2023 at 4.0625% (3.75% in 2022). In other words, we will pay more if we do not pay the tax debt on time.
• The Public Indicator of Multiple Effects Income (IPREM): an annual IPREM of €7,200 (previously €6,948.24) will be established for 2023. In the cases in which the reference to the minimum interprofessional salary has been replaced by the reference to the IPREM, the annual amount of the latter will be €8,400 (previously €8,106.28) when the corresponding regulations refer to the minimum interprofessional salary in annual computation. However, if special payments are expressly excluded, the amount will be €7,200 (previously €6,948.24). This indicator is the one used to calculate, for example, the access to subsidies or special allowances, therefore, it will be more difficult to access them.

With respect to the much announced "tax on large fortunes", this is a new tax element essentially designed so that those taxpayers resident in autonomous communities in which the wealth tax is 100% subsidized, pay a very similar level of tax with respect to taxpayers who do not reside in these autonomous communities. Specifically, in the Balearic Islands, it will only affect, and to a relatively limited extent, estates, not related to economic activity, and which exceed 40,000,000 €.

It is however important to note a modification, almost unnoticed and certainly of very conflicting wording, that has been made to the Wealth tax regulations and that obliges Non-Resident individuals to declare assets for those participations in companies whose assets are 50% made up of real estate located in Spain, and this change IS made effective 12/31/2022.

• Increases in the reduction of income from work
  • Taxpayers with net earned income of less than €19,747.5 (previously €16,825), provided that they do not have income, excluding exempt income, other than earned income of more than €6,500, will reduce their net earned income by the following amounts:
    • 6,498 (previously €5,565) if the net income from work is equal to or less than €14,047.5 (previously €13,115).
    • 6,498 (previously 5,5656) minus the result of multiplying by 1.14 (previously 1.5) the difference between the earned income and 14,047.5 if the net earned income is between 14,047.5 and 19,747.5
• The lower threshold of the obligation not to file a tax return is raised with respect to recipients of earned income. Specifically, taxpayers who receive earned income from more than one payer (and in other very specific cases, as before) are not obliged to file a self-assessment tax return if the sum of such income does not exceed €15,000 (previously €14,000).
• A reduction of 10% of the net income is also established, in 2023, for taxpayers who determine it in objective estimation.
• The percentage applied to expenses that are difficult to justify for businessmen and professionals in simplified direct estimation is increased to 7%, although the limit of €2,000 is maintained.
• The absolute contribution limit of €1,500 is increased by an additional €8,500, provided that such increase comes from company contributions or employee contributions to the same social welfare instrument, for an amount equal to or less than the amounts resulting from the annual amount of the company contribution.
• The following are regulated new tax rates, adding two brackets to the state taxable base: between 200,000 and 300,000 euros. a rate of 27% (formerly 26%) is applied and, as from 300,000 euros, a rate of 28% (formerly 26%) is applied.

  • Women with children under 3 years of age entitled to the application of the minimum for descendants who at the time of the birth of the child receive contributory or assistance benefits from the unemployment protection system, or who at that time or at any time thereafter are registered in the corresponding Social Security or mutual insurance scheme with a minimum period, in the latter case, of 30 days of contributions, may reduce the differential tax liability by up to €1,200 per year for each child under three years of age until the child reaches three years of age. In cases of adoption or fostering, both pre-adoptive and permanent, the deduction may be made, regardless of the age of the child, during the 3 years following the date of registration in the Civil Registry.

    Until now, the deduction could only be applied by mothers who were employed or self-employed.

  • The deduction of up to €1,200 will be calculated proportionally to the number of months of the tax period following the moment in which the requirements are met, in which the woman is entitled to the minimum for descendants for that child under 3 years of age, provided that during those months the child support supplement provided for in Law 19/2021, of December 20, establishing the minimum living income, is not received by either parent in relation to said descendant.
  • When a deduction is made in relation to that descendant for registering with the social security or mutual insurance company after the birth of the child, the deduction corresponding to the month in which the 30-day contribution period is fulfilled will be increased by €150.
  • The increase in the deduction for day care expenses will be limited to the total amount of the actual unsubsidized expenses paid to the day care center, whereas previously the limit was the social security contributions paid .

• Women with children under 3 years of age entitled to the application of the minimum for descendants who at the time of the birth of the child receive contributory or assistance benefits from the unemployment protection system, or who at that time or at any time thereafter are registered in the corresponding Social Security or mutual insurance scheme with a minimum period, in the latter case, of 30 days of contributions, may reduce the differential tax liability by up to €1,200 per year for each child under three years of age until the child reaches three years of age. In cases of adoption or fostering, both pre-adoptive and permanent, the deduction may be made, regardless of the age of the child, during the 3 years following the date of registration in the Civil Registry.

  Until now, the deduction could only be applied by mothers who were employed or self-employed.

• The deduction of up to €1,200 will be calculated proportionally to the number of months of the tax period following the moment in which the requirements are met, in which the woman is entitled to the minimum for descendants for that child under 3 years of age, provided that during those months the child support supplement provided for in Law 19/2021, of December 20, establishing the minimum living income, is not received by either parent in relation to said descendant.
• When a deduction is made in relation to that descendant for registering with the social security or mutual insurance company after the birth of the child, the deduction corresponding to the month in which the 30-day contribution period is fulfilled will be increased by €150.
• The increase in the deduction for daycare expenses will be limited to the total amount of the actual unsubsidized expenses paid to the daycare center, whereas previously the limit was the social security contributions paid. previously the limit was the social contributions paid.

The tax rate is reduced from 25% to 23% for entities whose net turnover for the immediately preceding tax period is less than €1,000,000 and are not considered as asset-holding entities.

• An assortment of changes is taking place in VAT:
  • Tampons, sanitary towels, panty liners, panty liners, condoms and other non-medicinal contraceptives are taxed at a reduced rate of 4%.
  • From January to June 2023, the VAT applicable to bread, flour, milk, cheese, eggs, fruit, vegetables, pulses, potatoes and cereals will go from 4% to 0%; and from 10% to 5% for oil and pasta. WARNING: this reduction will be eliminated if core inflation falls below 5.5% (in November it was at 6.8%).
• Modification of taxable income due to bad debts.
  • The minimum amount of the taxable base of the transaction is reduced to €50 (previously €300), which can be modified when the defaulting recipient is a final consumer.
  • The procedure is made more flexible by incorporating the possibility of substituting the judicial claim or prior notarial requirement to the debtor for any other means that reliably proves the collection claim to this debtor.
  • The period for VAT recovery is extended to 6 months from the date the credit is declared uncollectible. The regulation regulates a transitional regime so that all VAT taxpayers whose modification period has not expired by January 1, 2023 can benefit from the new 6-month period.

• The Balearic Islands Government modifies the scale of the Transfer Taxso that:
  • The rate is increased from 11.5% to 12% for transfers of more than 1,000,000 euros and 13% for transfers of more than 2,000,000 euros.

For tax periods beginning on or after January 1, 2022, certain aspects of Law 20/1990, on the Tax Regime of Cooperatives, are modified to consider worker cooperatives as specially protected, specifically:

• The number of salaried workers with indefinite-term contracts may not exceed 20 percent (previously 10 percent) of the total number of partners. If the number of partners is less than 5 (previously 10), one salaried worker may be hired, and if it is between 6 and 10, 2 salaried workers may be hired.
• The cooperative may employ employees through any other form of contracting, without losing its specially protected status, provided that the number of legal working days worked by these workers during the fiscal year does not exceed 25% (previously 20%) of the total number of legal working days worked by the members.