In 2004, all of us living in Spain will face a number of tax changes: some of them were adopted in 2023 and then extended until the end of 2024, others are completely new. Let’s look at the most important changes affecting various aspects of life and work in Spain.
Income from rental housing
Last May, a new housing law came into force in Spain, providing a range of personal income tax benefits for new long-term rental agreements. We are talking about residential real estate that tenants rent for permanent residence, i.e. which will serve as their primary residence. In the spring of 2024, the tax campaign for IRPF (Impuesto sobre la Renta de las Personas Físicas) for 2023 will begin: owner-lessors who entered into long-term lease agreements in 2023 have the right to reduce the amount of net income received from rent in the declaration by 60 %. For contracts concluded in 2024, income from which must be declared in 2025, a similar benefit is provided, but in a different amount – 50%.
Neither tourist rentals, nor seasonal rentals, nor single room rentals qualify for this benefit.
The law provides for an increase in the benefit to 90% in certain cases. In particular, if the housing is located in an area of high demand, where there is an acute shortage of available rental properties. The problem is that no Spanish autonomy has yet approved the final list of such zones. Catalonia and the Basque Country were the first to start work in this direction, but even there it is still far from complete. Up to 70% benefits can be obtained when renting housing to young people aged 18 to 35 years, but, again, in areas where there is a shortage of available housing.
Additionally, it must be kept in mind that the Government has made it mandatory for all taxpayers to file their annual IRPF return electronically.
Electricity and gas taxes
Starting in 2024, the Spanish Government intends to gradually increase taxes on electricity and gas, which were reduced in 2022. VAT, which is highlighted as a separate line in each of our invoices, was previously reduced from 21% to 5%, but throughout 2024 it will be charged at a rate of 10%. The tax on electricity production was temporarily abolished (previously 7%), but will return again in 2024: at a rate of 3.5% until March and 5.25% until June. The special tax on electricity was reduced from 5.1% to 0.5%, but will rise again in 2024: to 2.5% during the first quarter and to 3.8% during the second quarter.
VAT on natural gas will remain at 10% during the first three months of 2024, VAT on ecofuels or biogas will also remain at 10%, but during the first half of 2024.
Income tax for small and medium-sized businesses and entrepreneur quotas
Corporate tax in 2024 (for 2023) for companies whose turnover did not exceed 1 million euros and recorded a profit at the end of the year will be calculated at a rate of 23% (rather than 25%). Newly created companies have the right to pay corporate tax at a rate of 15% in the first years of profitable activity.
Some of the innovations will also affect individual entrepreneurs. In 2024, depending on the actual income received, the entrepreneur’s quota will be charged on a progressive scale from 225 to 530 euros per month. At the same time, entrepreneurs have the right to change the tax base once every 2 months, if necessary, in order to adjust social contributions to their income, if it is subject to seasonal fluctuations.
Net income will be calculated as the difference between gross receipts and all expenses associated with and necessary for conducting economic activity. The quota of an entrepreneur whose net income does not exceed the Interprofessional Minimum Wage (SMI), set in 2024 at 1.134 € per month, will be 225 €. And, regardless of the total amount of income received during the year, all entrepreneurs are required to file an annual tax return, even if they spent only one day as an entrepreneur.
Transactions with cryptocurrency
Starting from January 1, 2024, it is necessary to declare all transactions with cryptocurrencies, including those made/placed outside Spain. Both individuals and legal entities who are residents of Spain, as well as permanent establishments in Spain of non-resident individuals and legal entities, must submit such a declaration.
The information declaration must contain information about all cryptocurrencies located outside Spain. Its real owners, beneficiaries, persons vested with the right of ownership/disposal apply, even if the cryptocurrency was owned or managed for a limited period of time per year. The information should include the platform, information and balance for each cryptocurrency in units and in euros, indicating the total number of units issued for circulation at the beginning of the year, and much more.
Sales on marketplaces
Marketplaces or Internet platforms for selling goods such as Vinted, Etsy or Wallapop, in accordance with the pan-European directive, starting from January 1, 2024, will notify the tax authorities of all EU member states, including Spain, of those sellers whose sales during the reporting period period exceeded 30 transactions or 2,000 euros in cash receipts.
VAT on essential food products
In the first half of 2024, the reduced VAT (IVA) on essential food products will remain. It will be charged at a rate of 4% on the following goods: bread, flour, milk, cheeses and eggs. Also, VAT on pasta and vegetable oil will be reduced from 10 to 5%.
Buying electric vehicles
In 2023, a tax incentive for the purchase of an electric vehicle was approved, which will be valid until the end of 2024. All electric vehicles purchased between 30 June 2023 and 31 December 2024 for private use, i.e. those not involved in professional or economic activities are entitled to a 15% discount on the purchase price (the basis for calculating the discount is limited to a threshold of 20,000 €), which must be recorded in the annual tax return.
The same applies to the installation of equipment for charging an electric car: 15% discount on the cost of expenses with a calculation base of no more than 4,000 €.
Improving the energy efficiency of housing
The campaign to provide tax benefits to owners who have carried out work aimed at improving the energy efficiency of housing has been extended until December 31, 2024. A reduction in the amount of personal income tax based on the results of filing an annual return is possible by 20, 40 or 60% of the amount of expenses incurred (of course, everything must be supported by invoices). It is important to complete all work by the end of this year.
A 20% tax deduction can be obtained after optimizing the heating/cooling system of the home (the total annual cost is limited to 5,000 €). The effectiveness of the work performed must be confirmed by an energy certificate. Those. In addition to invoices, it is necessary to obtain a certificate indicating the energy efficiency class of a particular residential property.
A 40% tax deduction is provided in the case of work aimed at reducing the consumption of electricity obtained from non-renewable sources (the total annual cost is limited to 7,500 €). The work will be considered effective if consumption is reduced by at least 30%, or the energy efficiency class of the residential property increases to “A” or “B”, which, again, must be confirmed by an energy certificate.
A 60% tax deduction is provided for residential complexes. Those. each owner will be entitled to a tax deduction if work to improve energy efficiency has been carried out throughout the building, affecting all existing residential units, and at the same time the reduction in consumption of electricity obtained from non-renewable sources is at least 30%, and the energy efficiency class of the entire residential building will increase to “A” or “B”.