New measures adopted by Spain to create additional…

New measures adopted by Spain to create additional tax revenue


image_previewThe general elections held in Spain last November brought about a change of government with the right wing PARTIDO POPULAR securing a comfortable majority in parliament.

The new Prime Minister, Mariano Rajoy, made it clear when he took office in December that Spain had a very hard time ahead, if it was going to achieve a substantial economic recovery.

Since then countless new laws have been approved which seek to create revenue for the government.

This circular is aimed at providing a clear summary of the new measures introduced by the government, with a view to increase taxes and Social Security revenue. Whilst every effort has been made to provide a concise explanation of the changes, nevertheless the complexities brought about must be studied in detail in every individual case.

  1. 1. A quiet disclosure (Tax amnesty).

At the end of March the government introduced new measures designed to make it possible for “undisclosed” income and assets to be regularized as part of a “soft landing” tax amnesty. This amnesty will be in force until the 30th November. The disclosure must be done by way of a personal and confidential declaration, and must include full details of the assets not previously reported. A 10% tax will be levied. Other penalties relating to foreign bank accounts will also apply. Each case is different and it’s all “new ground” for the authorities and for the professional advisers. We advise a thorough and detailed review, ahead of making any declarations.

  1. Other tax changes as from 1st September.


  • The general rate of VAT goes up to 21% from 18% for products such as tobacco, alcoholic drinks and hygiene, amongst others.
  • The reduced rate of VAT goes up from 8% to 10%. This rate will be applied to items such as public transport, hotels, restaurants etc, amongst others.
  • In addition a wide list of products and services currently taxed at a rate of 8% for VAT purposes will be subject to the higher rate of 21%.


  • Financing costs will be limited to 30% of the operational profits of any business. Any excess can be carried forward for the following 18 years.
  • Large companies will have to make greater payments on account during the year.


  • From the 1st September withholding taxes on invoices issued by self employed professionals will go up from 15% to 21%.
  • From the 1st January 2013 personal allowances related to the habitual home will cease.
  • Gains generated between the 12 May and the 31 December 2012, on the sale of homes by individuals (resident and not resident) purchased between the above dates, will have a 50% reduction.


Businesses (companies, partnerships and self employed individuals) will not be able to receive payment of their invoices in cash for amounts in excess of 2.500€.

Employment and payroll changes.

Unfair dismissals will be subject to PAYE deductions.

Social Security contributions will be subject to a 20% surcharge if paid after the standard month of grace.

Unemployment benefits will be paid at 70% of the base rate during the first 180 days and at 50% thereafter.

In 2013 the employers Social Security contributions will go down by 1% and by a further 1% in 2014. In addition the maximum bases for calculating these contributions will rise by 5% in both 2013 and 2014. The minimum bases will also rise, by 1% in the same periods, and will also be applied to self employed individuals. All other sources of regular employment remuneration will be subject to the above mentioned contributions.

All reduced rates of Social Security contributions (as a result of a commitment to create jobs etc)in force until now, will be abolished.