Accrued taxes and tax revenues

The taxes accrued increased by 14.9% in 2021 ( Table 1.4 ). For the four main tax groups (Chart 1.22 and Table 1.3 ) the increase was slightly lower, at 14.7%. The difference between the two measures is not large because, although the total includes the Tax on Insurance Premiums (with an increase in rates in 2021) and the new taxes (the Tax on Financial Transactions and the Tax on Certain Digital Services), there is also environmental taxation with a sharp decline due to the temporary elimination of the Tax on the Value of the Production of Electrical Energy. In both cases, the 2021 figure is higher than that of 2019 (5.1% and 5.2%, respectively) and similar to the 15.1% growth recorded in tax revenues. In terms of Chart 1.22, the latter means that the transition from accrual to cash at the aggregate level was practically zero.

In this sense, unlike what happened in 2020, in 2021 the regulatory and management changes ( Table 1.5 ) reduced income, but not significantly. In terms of cash collection, the effect was estimated at a loss of 501 million compared to the previous year, just three-tenths of the growth of the year.

The measures that influenced 2021 revenues were of a very diverse nature. They can be grouped into four different blocks: the group related to the measures that were implemented throughout 2020 to combat, in different ways, the effects of COVID; A second block would include the regulatory changes included in the 2021 PGE; A third set of measures would be approved in order to mitigate the impact of rising electricity prices; and a final group that would collect extraordinary income and returns.

Before going into the details of the amounts, it is necessary to clarify that the figures are calculated for cash purposes and with the aim of correcting all those elements that may distort the rate of change. The first aspect is important because some of the measures had a very different effect on accrual and cash due to the mere fact of the shift between the period in which the obligation is generated and the time of receipt. A clear example is the Tax on the Value of Electric Energy Production, which was abolished in two accrual quarters, although only one of them affected the 2021 revenue. But it can also be said about the VAT reduction on electricity, valid for just over six months, but only four of them with effects at the cash register. And it is more evident in those measures that are mostly implemented in the annual tax return (such as rate increases for high incomes in personal income tax or the limitation on the exemption of foreign income in corporate tax). As regards the second aspect, the influence on the rate of change, it is necessary to take into account not only the measures starting in 2021, but also those that, being from 2020, alter the comparison with 2021. This approach particularly affects the first and fourth groups mentioned above.

The measures that had the greatest impact in 2021 were those related to the price of electricity. In total, the reduction in income resulting from these measures was 1.605 billion. The first measures were approved at the end of June and involved a reduction in the VAT rate (from 21% to 10%), applicable to electricity consumption in contracts whose contracted power was less than 10 kWh (basically domestic consumption), and the elimination of the third quarter of the Tax on the Value of Electrical Energy Production. Both measures meant a loss of income valued at 1,269 million (509 million from VAT for the June-October period, and 760 million from the Tax on the Value of Electrical Energy Production for the third quarter). Subsequently, in mid-September, the measures were expanded by adding a rate reduction (from 5.11% to 0.5%) on the Special Tax on Electricity and extending the elimination of the Tax on the Value of the Production of Electrical Energy to the fourth quarter (this last measure no longer having effect in 2021 since that quarter would have been paid in February 2022). The impact of the reduction in the rate of the Special Tax on Electricity is estimated at 336 million for consumption between September 15 and the last day of November, which is the period accounted for in 2021 revenues.

The second block of impacts by quantitative importance was that of the measures approved in the PGE-2021, which meant an increase in revenue of 1,462 million. Three groups could be distinguished. The first is related to rate hikes and includes three measures: the increase in the rate of the general base of personal income tax aimed at higher incomes (with an impact of 131 million in withholdings from work); the change to the general rate of VAT on sugary drinks (314 million for the first ten months of validity); and the increase of two points (from 6% to 8%) in the rate of the Tax on Insurance Premiums (476 million for the period January-November). As can be seen, the effect on 2021 revenues was less than the impact on accrual, which would also include the part of the increases carried over to 2022. This divergence is especially greater in the case of the increase in personal income tax for high incomes because the full effect (on the general base plus the savings base part) will be completed when the 2021 tax return is submitted in June 2022. At that time, the impact of the modification in the limits of the reduction for the amounts invested in pension plans will also be seen.

The second group within the measures of the PGE-2021 would be made up of the two new taxes: the Financial Transactions Tax and the Tax on Certain Digital Services. Both figures came into effect at the beginning of the year, but with the obligation to pay the amounts accrued since January 1. The impact on 2021 tax collection was 462 million (296 from the January-November period in the first case and 166 from the first three quarters in the second).

Thirdly, a measure that was also included in the 2021 PGE is the 95% limitation of the exemption of income from participations in profits or from the transfer thereof in Corporate Tax for companies with a turnover exceeding 40 million euros. In 2021, the measure was applied to instalment payments and is estimated to have resulted in an increase in revenue of 79 million. The impact was small because most of the affected companies paid taxes in 2021 through the minimum payment that depends on profits and not on the tax base, which is the one modified by the rule. In fact, it is estimated that the base raised by the measure was more than 1.65 billion and less than 15% of this corresponded to companies that paid taxes according to the base. The effect of the measure will be fully seen when the year is settled in the annual declaration, which will mostly be submitted in July of this year.

The impacts derived from extraordinary income and refunds subtracted 824 million from tax revenues. This is a very heterogeneous group that includes both refunds actually made in 2021 (473 million for single provincial VAT records and 94 million for rulings in the Non-Resident Income Tax), as well as the differential impact caused by some measures that are They carry over from the past (maternity benefits, interest as a result of the ruling of unconstitutionality of RDL 2/2016 of installment payments, or for the income from the Corporate Tax records that occurred in 2020).

In last place would be all the measures linked to COVID implemented in 2020 and which affected in different ways the comparison of income between 2021 and 2020. In total, these measures amounted to 466 million. The most relevant are those related to the liquidity of companies that were in force in 2020 (also in the first quarter of 2021, but with a much smaller impact). The aim was to facilitate the payment of tax obligations by deferring them. This reduced the collection in 2020 (due to the amounts not collected before the end of the year) and therefore had a positive impact in 2021. Secondly, there are the support measures for SMEs, measures that took various forms (in particular: changes in the modality of fractional payment, elimination of days in a state of alarm in the calculation of modules and increase of the general reduction from 5% to 20/35% in the objective estimation of income). The changes had a negative effect on the VAT of the simplified regime and on the installment payments of personal income tax in 2020 and in the first payment of 2021, although the greatest impact was observed when applying the new general reduction in the annual personal income tax declaration (-195 million, including the remaining impact of the elimination of days in a state of alarm). And a third element to highlight within this group of measures was the rate reductions on COVID-related products (masks, vaccines, PCR, etc.). In this case, the impact is less than one might think when calculating in differential terms with respect to the previous year when some of the measures were already in force.

Analyzing the evolution of accrued taxes and income by figures, in the IRPF the accrued tax grew in 2021 by 9.2%, 9% if measured with respect to 2019 ( Table 1.3 ). As seen, the growth of the base (household income) explains almost six points of this increase and the rest comes from the higher average effective rate.

Withholdings on income from work and economic activities grew by 7.1%, 6.7% if only those from work are considered ( Table 2.3 ). In the latter case, the amount of remuneration (mainly salaries, pensions and unemployment benefits, including transfers from ERTE) increased less, by 4.3%. The remainder was contributed by the increase in the effective rate as a result of the increase in the rate on pensions (due, above all, to the entry of pensioners with a higher average pension than those who were already receiving it the previous year) and the loss of weight of unemployment benefits, of an exceptionally high amount in 2020 and with an average withholding practically equal to zero. Within salaries, the growth in withholdings was greater in the private sector (7.1% compared to 2020, 4.4% compared to 2019), despite the decrease in the rate due to the recovery of the wage bill in SMEs where the average rate is lower. In the public sector, wage withholdings grew by 5.8%, two points less than in 2020, with a very similar increase in the total wages (5.1% in 2021, 5.2% in 2020). In pensions, withholdings grew by 7.2%, below the 8.8% of 2020. The moderation observed in this part of the withholdings is a consequence of the irregular behavior of private pensions in 2019 and 2020 (a sharp drop in the first of these years and an exceptional increase in the second). Considering only public pensions, the growth in withholdings in 2021 is higher than that observed in 2020 (7.2% compared to 6.4% in the previous year), mainly due to the increase in the pension mass. As regards withholdings on capital income, in 2021 they grew by 7.4%, but were still below the levels reached in 2019 and even in 2018 ( Table 2.1 ). In the case of withholdings on capital gains, given that there was no change in the rates (the increase in rates based on savings for high incomes will be specified in the annual declaration), the evolution is the same as that of income: a 2.2% drop in 2021, adding to the 20.5% drop in 2020. Compared to 2019, these withholdings are 22.3% lower than those of that year. For their part, withholdings on leases, mainly for premises, rose by 5%, but this growth is insufficient to recover pre-pandemic levels (in 2021 the accrued withholdings were still 10.1% lower than in 2019). Unlike the previous years, withholdings derived from capital gains from investment funds grew again in 2021 and also with unusual intensity (80%, in 2020 they had grown by 12.3%). Since these withholdings have been in force, only in four years (1999, 2000, 2007 and 2008) have levels higher than those of 2021 been recorded. Finally, split payments by personal companies increased by 25.6%, a rate conditioned by the comparison with a 2020 affected by the different measures adopted to alleviate the effects of the pandemic among companies under the objective estimation modality. However, compared to 2019, payments in 2021 were 10% higher than in 2021, which gives an idea of the intensity of the recovery of SMEs, especially in the last part of the year.

Income from personal income tax increased by 7.5% to 94.546 billion. It is a smaller increase than that observed in the total income, but it must be remembered that in 2020 the personal income tax increased, in contrast to the general fall in the rest of the taxes, thanks to the cushion provided by public income (salaries of the Public Administrations, pensions, transfers linked to the ERTE and aid to the self-employed). In fact, if the comparison is made with 2019, it is concluded that this figure is the one that contributes the most to growth. Withholdings on income from work and economic activities, which are the main component of the tax, grew by 6.1%. Growth in the public sector (wages and pensions) and in the private sector (large companies and SMEs) was similar (6.8% in the first case and 7% in the second), although in the public sector the increase was almost the same as in the previous year and in the private sector it represented a recovery after the fall in 2020 that also allowed it to exceed by almost 5% the income recorded in 2019. The growth in SMEs was particularly notable (14.7%; 5.4% compared to 2019). In the same sense, the fractional payments of personal companies stood out (17.4% and 5.7% more than in 2019). In the withholdings on capital income, the most notable thing was the exceptional increase in those derived from profits in investment funds (86.2%, more than doubling the number in 2019); Both the withholdings on leases and on movable capital remained well below those recorded two years earlier. Finally, the annual declaration also contributed to the growth due to the lower amount of the refunds made, since they came, for the most part, from the liquidation of income for the 2020 financial year.

The Corporate Tax accrued grew by 31.8% in 2021 ( Table 3.1 ). The increase was due to the growth of fractional payments, which increased by 50.4%, thanks to the good performance of the bases and the greater contribution of the minimum payment, which is based directly on profits and not on the taxable base ( Table 3.2 ). The greatest growth occurred in payments from consolidated groups (where this minimum payment is more relevant), which almost doubled those of 2020 (81.5% without the extraordinary income derived from the merger of companies and the sale of assets that occurred in 2021). Payments by large companies not belonging to groups grew by 22.3%, while the increase for SMEs was 9.6%, with a logical divergence between those that paid taxes according to the profits of the year (39.4%) and those that did so according to their last annual payment (0.7%).

Corporate tax revenues in 2021 amounted to 26,627 million, which means that they grew by 67.9%, a very high rate as was the fall in 2020 (-33.2%). The reasons for both were the same. On the one hand, in 2020 most of the decline was due to the drop in installment payments (-27.1%) due to the halt in activity caused by the pandemic; In 2021, with the relative normalization of activity, the opposite occurred (+53.7%), with the addition of extraordinary operations carried out by some tax groups (although without them payments would still be 3.1% above 2019). On the other hand, the refunds made in 2020 reached a very high amount because that was the case for the refunds requested in the 2018 financial year. This was not the case in 2019, which meant that the refunds made in 2021 were around €2.9 billion lower than in the previous year. Compared to 2019, tax revenues in 2021 were 12.2% higher than those of two years earlier.

The VAT accrued in the period grew by 19.2% (+3% if compared to 2019; Table 4.1 ) thanks to the positive evolution of the subject expenditure (the different regulatory measures did not have, taken together, sufficient intensity to significantly change the rate). In the final part of the year, the recovery of gross VAT intensified due to the rise in prices that combined with the improvement in activity experienced throughout the year. The year ended with an increase of 17.8%, exceeding 2019 levels by 5% ( Table 4.2 ). The improvement was greater in quarterly statements (18.6%), which include the sectors that were most affected by the limitations on activity. Refund requests increased by 14.4% (13.7% monthly and 17% annually) due to the growth in exports (20.6% compared to 2020 and 7.6% compared to 2019) and the increase in costs, especially energy costs, in the latter part of the year.

VAT revenues rose to 72,498 million ( Table 4.2 ), a growth of 14.5% that offset the 11.5% drop last year, so that the Collection in 2021 was 1.3% higher than in 2019. The increase would have been greater if it were not for the regulatory and management measures which, in total, meant a loss of almost 600 million (among them, the reduction in the rate for domestic electricity consumption, in force since the end of June, subtracted just over 500 million). The recovery in spending resulted in an increase in gross income of 11.9% (1.4% more than two years earlier), income that grew particularly strongly, as in other figures, in SMEs (16.4%, 2.3% over 2019). In all cases, the figures are lower than those of the accrual because in 2021 the cash flow was affected by the transfer of income from the last part of the year (which had the greatest growth) to 2022.

The Excise Taxes accrued increased by 7.1% in 2021, still far (-7.1%) from the 2019 levels ( Table 5.1 ). The Hydrocarbon Tax grew by 13.6%, almost two points above consumption, due to the increase in the effective rate resulting from greater use of products taxed at higher rates. In 2020, the opposite had happened (consumption of subsidized diesel, which has a lower rate, grew slightly compared to the fall in gasoline and automotive diesel; Table 5.5 ). Despite the improvement, the tax accrued was still 5.8% lower than that achieved in 2019, with a more positive evolution in gasoline than in automotive diesel. The start of the year was not good due to the still existing restrictions on mobility, but as these were lifted, it was the sharp price increases that hampered the recovery of the tax. In the Tobacco Tax, the accrued revenue fell by 0.8% (-0.8% in cigarettes and -0.5% in other products; Table 5.6 ). The drop was due to a decrease in the average price, although in the final months of the year the main brands raised their prices. Consumption, for its part, remained practically stable (0.4% of total consumption; 0.2% for cigarette packs and 0.7% for the rest of the products). Compared to 2019, the drop is estimated at 5%. The Electricity Tax fell by 20% ( Table 5.7 ), as a result of the drastic reduction in the rate (from 5.11% to 0.5%) that came into effect in mid-September. Both consumption and, above all, prices increased in 2021, pushing the taxable base to a growth of 20.1%. The Tax on Alcohol and Derived Beverages grew by 33.2% ( Table 5.2 ), in line with the increase in consumption and in response to the low levels of 2020. However, they were unable to recover the levels of 2019 (-4.8%), reflecting the still weak situation in 2021 for the hotel and restaurant industry. Something similar happens with the Beer Tax, whose increase is estimated at 8.7% (-2.2% compared to 2019; Table 5.3 ). The Coal Tax, which has become residual, decreased by 9.4%.

The collection of Special Taxes stood at 19,729 million, 5% above the figures for 2020, but still 1,651 million (7.7%) less than in 2019 ( Table 5.1 ). Its growth is lower than that of the accrued tax due, as mentioned in the VAT, to the displacement of the last accruals from 2021 to the 2022 cash. This is especially relevant in the Hydrocarbon Tax (11.3%, more than two points below the accrual) and in taxes on alcohol (7% in cash compared to 24.7% of the accrual). In the case of the Electricity Tax, however, the effect is the opposite (-12.2% in cash and -20% in accrual) due to the reduction in the rate in the final part of the year.

In 2021, income from figures other than the main ones totalled 9,985 million, 23.4% more than in 2020. The increase allows the recovery of the loss that occurred the previous year compared to 2019, although with a nuance: Both the 2021 and 2019 data are conditioned by regulatory measures, in the first case slightly up and in the second almost 900 million down. In 2021, there were three regulatory measures that affected these revenues: the temporary elimination in the third and fourth quarter of the Tax on the Value of Electric Energy Production (-760 million for the third quarter alone; the fourth should have been collected in 2022), the increase in the rate (from 6% to 8%) on the Tax on Insurance Premiums (476 million), and the introduction of two new tax figures (the Tax on Financial Transactions and the Tax on Certain Digital Services, with revenues of 296 and 166 million, respectively). Together, the measures contributed an additional 178 million, 2.2 points of the increase observed in this group of taxes.

Going into detail by figures, all of them showed growth compared to 2020, but, if analyzed in comparison with 2019, the situation was not as positive. This is the case of the Non-Resident Income Tax ( Table 6.1 ) whose income in 2021 grew by 20.9%, but was still 22.9% below the 2019 figure. The unfavourable evolution of capital gains is what mainly determines the course of this tax. With these results, both the Tax on Insurance Premiums ( Table 6.4 ) and the Taxes on Foreign Traffic ( Table 6.3 ) have gained importance within these other figures. The former was favoured by the rate increase, which increased revenue by 33%, or 2.2% if the impact of the increase is subtracted. This growth would be relatively low compared to the increases experienced before 2020. As regards Taxes on Foreign Trade, revenues grew by 17.6% and remained 1.5% below 2019, although slightly above the average level recorded between 2017 and 2019.

The other set of figures with a relevant weight in this group of taxes is the one formed by the environmental taxes ( Table 6.2 ) which includes the environmental taxation of Chapter I and the Tax on Fluorinated Gases. Environmental taxation decreased by 3%, mainly due to the temporary elimination of the Tax on the Value of Electric Energy Production in the second half of the year (although in 2021 the elimination only affected the third quarter). The fall in this tax for the year as a whole was not large (-3.4%) because it started from a low level (1,146 million when normal income is usually around 1,500 million) due to the drop in 2020 in the price in the wholesale market, the opposite of 2021 when prices soared (hence the impact of the elimination of a single quarter is estimated at 760 million). The tax on fluorinated gases also fell, by 2.8%, and this is the fourth consecutive year in which revenues have decreased. Except for the year of its implementation, which was not complete, the 2021 figure is the lowest in the historical series.

Chapter revenues increased 16.7% in 2021 (Table , fees by 15.2% and other revenues by 17.7%. The final collection was lower than in 2019, but that year the income was especially high due to an abnormally high figure for the Fee for the use of inland waters for the production of electrical energy. The 2021 figure is in the order of magnitude of 2017 and 2018. The same can be seen in the rates ( Table 6.6 ), adding that some have not yet recovered to a level that could be considered normal in 2021 (Issue Rate for DNI and Passports and Consular Fees).