Skip to main content

2. The Personal Income Tax

personal income tax income grew by 7.5% to reach 94,546 million. In the context of 2021, the increase is relatively small, but it must be remembered that this tax increased in 2020 thanks to the cushion provided by public income (AA.PP. salaries, pensions, transfers linked to ERTE and aid). to self-employed); Therefore, growth in 2021 was also more moderate. The strength of this figure is better appreciated if the comparison is made with 2019. In that case, it is concluded that this tax was the one that contributed the most to growth compared to that year. The growth in income was based, logically, on the good performance of household income, with all its components, except the returns on movable capital, showing good results. SMEs had a prominent place in this general evolution, both in terms of salaries and the benefits of personal companies.

The gross income of households grew by 5.9% ( Table 2.1 ). Given the situation in 2020, the incomes that improved the most were those that performed the worst last year, that is, incomes from the private sector (see Chart 1.15). On the other hand, public revenues, which in 2020 had supported household incomes, remained practically stable in 2021. Except for income from movable capital and those from rentals of premises, the rest of the income recovered intensely, remaining at the end of the year above the level they had in 2019.

Labor income, which is the main source of income in households, grew by 4.3% ( Table 2.1 ). Salaries increased by 7.4%. The trend in the year, as a reflection of what had happened in 2020, was the disparate evolution in the private and public sectors. Private sector salaries grew by 8.2% thanks, in particular, to the good results of SMEs (15.1%, -12.4% in 2020), especially in the second half of the year. In Large Companies, growth was 3.4%, which offset the fall in 2020 (-2.7%). In both cases, the wage bill in 2021 exceeded what it was in 2019 (+0.6% in Large Companies and +0.8% in SMEs; +0.7% overall). By activities, the recovery was uneven because in 2021 there were still restrictions in some periods of the year that prevented complete normalization. Graph 2.1, which shows the variation in the wage bill between 2021 and 2019 by branch of activity, illustrates this point well.

Graph 2.1. Variation in the wage bill in large companies and corporate SMEs in %.

For their part, public salaries grew by 5.1% (in 2020, 5.2%). Throughout the year, the pace of growth moderated as a result of the progressive absorption of the impact of the hiring in health and education that took place in 2020 and the increases derived from the salary equalization process in the security forces. As a result of the above and unlike what happened in 2020, the wage bill grew more due to the increase in employment and less due to the increase in average performance, affected precisely by the entry of new employees with lower average salaries. By administrations, they were, as in 2020, the CC.AA. those that registered a greater increase in the wage bill, although the improvement was greater in the CC.LL. (Figure 2.2).

Graph 2.2. Variation rates in % of public salaries of the Central Administration of the Administration of the Autonomous Communities. and the Administration of Local Corporations.

Regarding public pensions, the pension mass grew throughout the year around 3.5% in a stable manner. Two and a half points were due to the increase in the average pension, which occurred due to the revaluation at the beginning of the year and, as usual, due to the incorporation of pensioners with average pensions higher than those already in the system. The other part of the growth came from a 1% increase in the number of pensioners. Chart 2.3 compares these results with those of the previous 10 years.

Graph 2.3. Composition of the variation in the mass of public pensions between growth in the average pension and the number of pensioners. Variation rates in %.

Household capital income (furniture, rentals and capital gains) grew by 12.6% ( Tables 2.1 , 2.4 , 2.5 and 2.6 ). Despite the growth, it was not possible to recover the level recorded before the pandemic (Graph 2.4). As can be seen in the graph, it was also not possible to reach the weight that these incomes had within household incomes, a percentage that had grown since 2017 after the slow decline that followed the fall from the peaks of the boom years in the first decade of the 2000s.

Graph 2.4. Amount and weight on household income in % of capital income.

However, the evolution was very uneven in the different types of income. Income from movable capital decreased again, 2.2% after losses of 19.7% in 2020. Compared to 2019, these rents closed the year with a drop of 21.5%. Dividends, which are the most important yields within these incomes, have fallen back to levels prior to 2018, and something similar can be said of other assets, such as fixed income, which, dragged down by low interest rates, have gone coming out of families' wallets. The result is an evolution like the one shown in Graph 2.5.

Graph 2.5. Amount and weight on household income in % of movable capital income.

Income from real estate capital suffered considerable losses in 2020 (-6.1%), but recovered in 2021 (+7.5%, +1% compared to 2019). Two trajectories are clearly distinguished, the one followed by housing leases and the one shown by the leases of premises, which are subject to withholding. The former fell in 2020 (-2.7%), but in 2021 they resumed a growth rate similar to those observed before the pandemic (+8.4%; +5.4% compared to 2019). The latter, on the other hand, also grew in 2021 (+5%), but without being able to compensate for the sharp drop they had in 2020 (-14.4%), so they remained very far from the 2019 level (-10.1 %). The weight that these incomes have within household incomes, in continuous growth before 2020, grew again without reaching previous levels (Graph 2.6).

Graph 2.6. Amount and weight on household income in % of rental income.

Capital gains were, by far, the income with the best results in 2021: they grew by 31% (in 2020 they had decreased by 12.2%). Although its weight is small, the exceptional increase in profits linked to investment funds stood out (80% after growth of 12.3% in 2020). In the case of these incomes, the comparison with 2019 is almost irrelevant given that the trend they have followed in recent years, accentuated by the good results of 2021, has caused the amount of these gains to reach its highest level since 2007. as is the case with its weight in household income (Graph 2.7).

Graph 2.7. Amount and weight on household income in % of capital gains.

Regarding the profits of personal companies ( Table 2.8 ), their growth in 2021 was 20.6%, higher than the 14.6% decrease in 2020, thus Rents in 2021 ended up being 3% higher than in 2019. The result is more notable because these companies are highly concentrated in activities such as transportation, hospitality, and personal and leisure services, which were especially affected by mobility limitations in 2020 and which in 2021 had not yet recovered. normality (we must remember that Easter was still celebrated with many restrictions). The improvement in income, both compared to 2020 and, above all, to 2019, was fundamentally an improvement in the average performance per company since the number of entrepreneurs remained at levels similar to those before the pandemic.

The effective rate on household gross income increased by 3.2% ( Table 2.1 and Chart 2.8). The origin of this increase is found in three elements: the regulatory changes with the increase in the rate in the general base and in savings for the highest incomes (2 points in the state rate from 300,000 euros in the first case and 3 points from 200,000 euros in the second) and the modification of the limits on reductions linked to pension plans; the increase in the pension rate (due, above all, to the usual sliding effect towards higher average pensions by new pensioners entering the system); and the loss of importance in 2021 of unemployment benefits, with average rates almost zero, and which in 2020 had lowered the effective rate. The increase in the rate caused by these elements was qualified because throughout the year the contribution to household income from the salaries of SMEs increased, which, with lower average rates, put downward pressure on the effective rate, which contrary to what had happened the previous year.

Personal income tax accrued grew by 9.2% in 2021 ( Table 2.1 ). As has been 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. Compared to 2019, the growth was 9%.

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 mass of remuneration (mainly salaries, pensions and unemployment benefits, including ERTE transfers) increased less, by 4.2%. The rest was contributed by the increase in the effective rate as a result of the increase in the pension rate (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 average withholding practically equal to zero. Within salaries, the growth of 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, salary withholdings grew by 5.8%, two points less than in 2020, with a very similar increase in the total salary (5.1% in 2021, 5.2% in 2020). In pensions, withholdings grew by 7.2%, below the 8.8% in 2020. The moderation observed in this part of the withholdings is a consequence of the irregular behavior that private pensions had in 2019 and 2020 (sharp fall in the first of these years and exceptional increase in the second). If only public pensions are considered, the growth in withholdings in 2021 is higher than that observed in 2020 (7.2% compared to 6.4% the previous year) due, above all, to the increase in the pension mass .

Withholdings on capital income grew by 7.4%, but were still below the levels reached in 2019 and even 2018 ( Table 2.1 ). In the withholdings on capital income, 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 the income: a drop of 2.2% in 2021 that adds to the 20.5% drop in 2020. Compared to 2019, these withholdings are 22.3% below those of that year. For its part, withholdings for leases, mainly for premises, rose by 5%, but this growth is insufficient to recover pre-pandemic levels (in 2021 the withholdings accrued were still 10.1% lower than in 2019). . Unlike the previous ones, withholdings derived from capital gains from investment funds grew again in 2021 and also with an unusual intensity (80%, in 2020 they had grown 12.3%). Since these withholdings have been in force, only in four years (1999, 2000, 2007 and 2008) have levels been recorded higher than those of 2021.

Regarding installment payments, they increased by 25.6%, a rate conditioned by the comparison with 2020 affected by the different measures adopted to alleviate the effects of the pandemic among companies using the objective estimation modality. However, if compared to 2019, payments in 2021 were 10% higher than that year, which gives an idea of the intensity of the recovery of SMEs, especially in the last part of the year.

Income from labor withholdings in the private sector decreased by 0.8%. This figure includes the amounts from deferrals granted in the first months of the pandemic and that were recovered throughout the year (rest of income in Table 2.3). The drop was not large compared to that observed in activity due to the impact of the ERTE on employment (workers remained in the company, although a part of their salary was covered by the SEPE) and the rise in the effective rate of salaries (due to the greater incidence of the crisis in sectors of activity with low salary levels). Precisely this different impact of the crisis on the different productive sectors helps explain the disparity between the slight increase in withholding income that was recorded in Large Companies (0.8%) and the 4.1% decline that was observed. in SMEs (including other income). In the AA.PP. Withholding income increased 7%. The behavior was similar to what these incomes had been experiencing in 2019 (the growth then was 6.5%) and this can be said for both salaries and pensions. In the first case, there was a rebound in the last part of the year due to the increase in withholdings from health and education, and due to the payment of the third tranche of salary regularization in the security forces. The final growth of 2020 in public salary withholdings was greater than 7%, with an increase of more than 5% in the wage bill and the rest due to the increase in the average rate. In pensions, withholdings grew by close to 6.5%, a slightly higher increase than in 2019 and with a different distribution: The average pension rose less (in 2020 there were no increases that occurred in 2018 and 2019) and the effective rate much more (3.5% compared to 2019 in which it barely grew because the lowest pensions benefited from greater increases ), compensating even for the lower growth in the number of pensioners (0.5%, 1.2% in 2019).

Regarding installment payments, they increased by 25.6%, a rate conditioned by the comparison with 2020 affected by the different measures adopted to alleviate the effects of the pandemic among companies using the objective estimation modality. However, if compared to 2019, payments in 2021 were 10% higher than that year, which gives an idea of the intensity of the recovery of SMEs, especially in the last part of the year.

Personal income tax income grew by 7.5% (+8.8% compared to 2019). The figure is lower than what the taxes accrued showed. The difference basically has to do with two factors: The accrued tax includes regulatory measures (such as rate increases for high incomes) that affect the annual declaration and that, therefore, will take effect in cash in 2022, and the displacement of the latest accruals between one year and the next one (in the 2021 box there are the bad results from the end of 2020, but not the good ones from 2021 that go to 2022).

Growth in 2021 was based on four elements: the increase in labor withholdings (particularly for SMEs), the decrease in refunds (including the Allowance to the Catholic Church, whose 2019 settlement was brought forward to December 2020), the growth of installment payments by companies personal and the exceptional increase in withholdings on capital gains in investment funds. In 2021, income from withholdings on income from work and economic activities grew by 6.1% (7.7% compared to 2019). The increase was even in the private and public sectors (7% and 6.8% respectively), although it must be taken into account that in the AA.PP. Last year was also one of growth and that part of the private sector withholdings in 2020 were counted in the rest of the income as they were affected by the deferrals caused by the fiscal measures to alleviate the situation of lack of activity of the companies (if Add these amounts in 2020, the increase in the private sector would be reduced by one and a half points).

Within the private sector, the greatest growth was observed in SMEs whose withholding income grew by 14.7% compared to 3.6% for Large Companies. The latter did not fall in 2020 due to the existence of some extraordinary income and that meant that in 2021 the rate was not very high. In any case, compared to 2019, SMEs also recovered their position more intensely than Large Companies (5.4% in the former, 4.4% in the latter). In this comparison with 2019, we must introduce the factor of the sectoral change that has occurred in the last two years, reducing the importance of activities with salaries and effective rates smaller than the average. This factor has led to a growth in the withholding rate and, consequently, withholdings exceeding the level of two years ago, more clearly than the wage bill did (+0.7% compared to 2019).

In the income from withholdings of the AA.PP., those from salaries grew by 6.6% and those from pensions by 7.2%; in the first case below 2020 and, in the second, the opposite. In salaries, the year began with a high growth rate, similar to what had been observed after the summer of 2020 as a result of hiring in health and education. This impact (and a similar one derived from the regularization of the security forces' salaries) faded as the months went by and, except for an occasional increase, the trend was one of moderation. Unlike 2020, in which growth occurred despite the drop in employment in the CC.LL. and in the Central Administration, in 2021 the final result of the year was due, above all, precisely to the increase in employment, which also caused salary increases and the effective rate to moderate. In pensions, on the other hand, the pattern was one of relative stability throughout the year, with increases of around 7.1% since March, distributed evenly between the increase in the pension mass and the rate.

The second element that allowed the increase in income was the returns made. Those linked to the annual declaration decreased by 4.6%. The majority correspond to refund requests from the 2020 Income Campaign which, given the special circumstances of that year, were reduced by 5.9% compared to the previous campaign. Added to this is the fact that the way in which the annual settlement of the Appropriation to the Catholic Church was carried out was also outside the normal pattern. This settlement is usually made in January for the outstanding balances of the declaration from two years earlier. However, the payment for 2019, which should have been paid in January 2021, was brought forward to December 2020. The consequence was that in 2021 the amounts for this concept were lower than those in 2020 and, therefore, its negative impact on income was also lower.

In line with what has been commented elsewhere in this report, the high growth in SMEs was also reflected in a notable increase in installment payments from personal companies: 17.4% compared to 2020 and 5.7% above 2019. Payments were affected by several regulatory measures in 2020 and 2021, although the one with the greatest impact (the increase in the general reduction approved at the end of 2020) had an effect on the annual declaration (in fact, the decrease in income in this was practically of the same amount as the estimated impact of said measure).

The last element to highlight in 2021 was the exceptional growth in withholdings derived from capital gains in investment funds. In 2020 they had not had bad results (they were the only withholdings on capital income that did not fall, they even rose by close to 12%), but in 2021 their increase was extraordinary: 86.2%. Never before has a level like that of 2021 (1,052 million) been reached. In the other withholdings on capital, the situation was not so favorable. In withholdings on movable capital income, a growth of 7.4% was recorded, insufficient to compensate for the sharp drop in 2020 (-20%), so that income remains more than 14% below those obtained in 2019. . And something similar can be said about withholdings for leases; In 2021 they were practically at the level of 2020 and, therefore, their income remains far from that of 2019 (-7.6%).