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Fiscal Year 2022

Accrued taxes and tax revenues

Accrued taxes grew by 13.1% in 2022 ( Table 1.4 ). In the four main figures the increase was 13.2% (Graph 1.21 and Table 1.3 ). Given the stability of the average effective rate, the growth was exclusively due to the increase in bases. The small difference between both aggregates is explained because the positive evolution of figures such as the Non-Resident Income Tax, the Foreign Traffic Tax and Insurance Premiums was largely offset by the sharp drop in income associated with environmental taxation, due to the temporary suppression of the Tax on the Value of Electrical Energy Production.

Tax revenues grew above taxes accrued, 14.4%. The fact that in the first months of 2022 the accruals corresponding to the last months of 2021 were entered, with a better general performance than those associated with the final part of 2022, which are collected the following year, is the main explanation for this difference.

A notable aspect in 2022 was the important role played by regulatory and management changes, which subtracted 7.2 billion from income in cash terms. Details of the measures taken into account can be found in Table 1.5 . The estimated impact assumes that, without these measures, income would have grown by 3.2% more.

The measures that influenced income were of a very diverse nature and have been grouped into four different blocks: the group related to those that were launched throughout 2020 to combat, in different ways, the effects of COVID; a second block would comprise the regulatory changes included in the PGE-2021 and that still have effects on 2022 income; a third set of measures would be those approved in order to alleviate the impact of the rise in electricity prices; and a last 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 variation rate. 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 was generated and the moment of income. A clear example is the reduction in the VAT rate from 21 to 5% applicable to natural gas, which came into effect in October 2022, but only affected cash income for December. And it is most evident in those measures that are mostly implemented in the annual tax return. Thus, the increases in rates for high incomes in Personal Income Tax included in the PGE-21 have had an impact on the tax paid in 2022, and something similar has happened with the limitation on the exemption of foreign income in the Corporate Tax. Regarding the second aspect, the influence on the variation rate, it is necessary to take into account not only the measures that begin in 2022, but also those that, being from previous years, alter the comparison with 2022.

As already happened in 2021, the measures with the greatest impact on revenue in 2022 were those aimed at mitigating the rise in electricity and gas prices. Together, these measures represented a loss of 6,636 million. Again, we must remember that this is the differential effect compared to 2021. If the impacts of 2021 and 2022 are added to have the reduction in income in a calendar year, the result would be 8,241 million (this figure is not the complete impact of all the measures approved in 2021 and 2022 because in some cases they have not elapsed). twelve months since they were launched). The largest loss occurred due to the suppression of the Tax on the Value of Electrical Energy Production (3,399 million). In 2021 the tax was already suspended, first in the third quarter and later in the fourth, although in cash collection it was only noticed in the income of the third in November (the fourth should have been entered in February 2022) . In 2022, the elimination of the tax was in effect all year. Secondly, there is the impact of 1,705 million due to the lowering of the rate (from 5.11% to 0.5%) in the Special Tax on Electricity. The measure came into effect in mid-September 2021, so the greatest effect on income occurred in 2022. For its part, the reduction in the VAT rate applicable (mainly) to domestic electricity consumption had a negative impact on income in 2022 of 1,313 million. The reduction was initially from 21 to 10%, but from mid-2022 the rate became 5%. The impact includes, therefore, the additional period that the measure was in 2022 compared to 2021 and the new lowering of the rate. Finally, in the month of December, income was also affected by the reduction in the VAT rate from 21 to 5% applicable to natural gas (wood and pellets also benefited from the change, but their weight is marginal). The peculiarity regarding the measurement of electricity is that the new rate applies to all sales, not just those for domestic consumption. This means that the initial impact on income is greater and is offset in subsequent periods. The net impact of the measure will only be observed when all taxpayers with the right to deduct the input VAT have submitted their declarations (it must be taken into account that in VAT only those who actually ultimately bear the VAT benefit from the rate reductions). tax, that is, final consumers and exempt sectors that do not have the right to deduct input VAT on their purchases).

Extraordinary income and returns subtracted 1,702 million from the growth in income. The majority was concentrated in the Corporate Tax (-2,202 million). These are returns derived from judgments (around 1,300 million) and deferred tax assets (DTA). The figure was partially offset by the positive impact recorded in VAT, although for the most part these revenues are the opposite response to the extraordinary refunds that were made in 2021.

In 2022, the measures approved in the PGE-2021 still had a positive impact on income (1,133 million). This occurred for two different reasons. On the one hand, the displacement of the income from year-end accruals to the first months of 2022. In this group are the increase in rates on withholdings from work (13 million), sugary drinks and Insurance Premiums (75 and 46 million respectively), and the new taxes (-23 million). In this case, the net effect is negative because in December 2022 the adjustment with the provincial territories of the amounts received since the entry into force of both taxes took place. On the other hand, there were measures whose effect had to be seen or completed in the 2021 annual declaration, such as the increase in rates for high incomes (326 million), the modification of the limits on contributions to pension plans in the Income Tax (352 million), the modification of the exemption for foreign income (333 million) and the increase in the rate of SOCIMI in Corporate Tax (11 million).

The rest of the measures are very diverse, although their impact is not, overall, great. There are, on the one hand, all those related in one way or another to COVID (in total 168 million). The largest ones are due to temporary measures with a sign opposite to what they had at the time they were implemented (this is the case, for example, of the extension of the general reduction in the modules or the recovery in the first months of 2021 of part of the amounts that had been deferred or suspended throughout 2020). And, on the other hand, the three remaining measures: those related to the rental of premises and the rehabilitation of housing from the annual personal income tax declaration with effect only from October 2021 and, therefore, of a very small amount (-7 million); the elimination of the Canon for the use of continental waters (-177 million) as a result, as has been said, of a ruling; and the exceptional increase in revenue from the Tax on Fluorinated Greenhouse Gases (+21 million) as a result of the regulatory change that came into force in September 2022.

Turning to analyze the behavior of accrued taxes and income by figures, the Personal Income Tax accrued grew by 13% in 2022, a result of the increase in the bases by 8.1% and the rate in 4.6% ( Table 1.3 ). Such a high rate has not been recorded since 2006, and it must be remembered that this rate is reached after growing by 11.9% in 2021, a year in which the pre-pandemic level was already widely exceeded.

Withholdings on income from work and economic activities grew by 12.4% ( Table 2.3) . This positive evolution was supported by the good performance of rents, which increased by 7.3% and the increase in the effective rate by 4.7%. The weight of these factors was not the same in all cases. In salaries, the 9% increase in the wage bill explains a large part of the increase in withholdings (up to 11.6%). Withholdings from the private sector had, once again, a more positive evolution (13.6%), with strong increases in both Large Companies and SMEs. Salaries in the public sector grew somewhat less, 7%, due to the lower thrust of the wage bill. The increase in the rate explains about three points of the increase in withholdings in the case of private salaries and around two points in public salaries. For its part, in pensions the increase in the rate was around 9%. This, together with the increase in rents, caused withholdings to grow by 17% during the year.

Regarding withholdings to the company, both installment payments and withholdings on economic activities increased for the second year at a good pace (17.7% for the former and 10.9% for the latter), thanks to the positive evolution of income.

Withholdings on capital income grew by 17.6%, ( Table 2.1 ). The increase was especially intense in withholdings on movable capital income (27.2%), but it was not enough to recover the level reached in 2019. Withholdings for leases, mainly for premises, rose by 11.5%, more than double the rate recorded the previous year, already equaling the level recorded in 2019. Regarding withholdings derived from capital gains from investment funds, they fell by 20.6%, after the strong advances observed in the previous two years.

Personal income tax income grew by 15.8%, more than double the rate reached a year earlier. The main reasons behind the increase in personal income tax income are the increases in salary and pension masses and their effective rates, the good results of the 2021 annual declaration presented at the end of June 2022 and the increase in benefits of personal businesses. Precisely the good result of the annual declaration explains part of the almost three points of greater growth in income with respect to taxes accrued. In addition, it must be remembered that in 2022 part of the accruals associated with the last quarter of 2021 were collected with a better performance than that observed in the accruals from the end of 2022 that will be collected in 2023.

Income from withholdings on income from work and economic activities grew by 12.6% (6.1% in 2021). The increase in the private sector was somewhat greater than in the public sector (12.9% and 11.7% respectively). Within the first, it was the income associated with SMEs that had a more dynamic behavior, with an increase of 17.3% compared to 10.7% for Large Companies. In the income from withholdings of the AA.PP., those from salaries grew by just over 6%, while those from pensions rose to 18.3%.

Fractional payments from personal companies grew by 21.7%, exceeding the income of the previous year by 716 million. This has been a notable growth, even more so if you take into account that in 2021 they grew above 17%.

The income from the annual declaration contributed 3.3 billion more than the previous year. The reasons for this result are two: the effect of the regulatory measures (increase in rates on the savings base and modification of the limits on contributions to pension plans, which together amounted to 691 million, preferentially affecting taxpayers with a positive differential rate) and higher growth in income not subject to withholding and in the upper sections of the distribution.

Income associated with withholdings on capital grew by 9.5%, well below the withholdings accrued, weighed down by lower income from dividends associated with the accrual of December 2021 and received in 2022. The growth in income in the last two years has not been enough to offset the loss suffered in the pandemic, so the level reached by these withholdings in 2019 has not yet been recovered. The same does not happen with income from withholdings on leases, which after growing by 11.3% in 2022 have already exceeded the pre-pandemic level. For its part, income associated with withholdings on investment funds decreased by 10.8%, after the intense growth recorded the previous year.

Corporate Tax accrued increased by 21% ( Table 3.1 ), in line with the estimated growth for the tax base. The increase in the tax accrued is greater than 5,300 million, of which almost 4,350 million correspond to the largest installment payments, the main concept within the tax. Fractional payments grew by 17.3% ( Table 3.2 ), thanks to the good performance of the bases and the greater contribution of payments that revolve around profits (minimum payment). The increase would reach 24.4% without taking into account the extraordinary income that occurred in 2021.

Income in cash terms grew by 20.8% ( Table 3.1 ) in line with the evolution of profits and bases in 2022 and 2021. The two concepts that most boosted collection were installment payments (17.7%) and income from the annual declaration (41.7%). In the case of the annual declaration, most of the income comes from the settlement of the 2021 financial year, which rose by more than 45% thanks to the growth in profits in 2021 (36%). Part of these high rates is due to the poor results of 2020, but the 2022 figures are also better than those recorded before the pandemic. Revenue growth was limited by the increase in returns made (26.6%).

Given the evolution of the subject final expenditure and the effective rate, the VAT accrued in the period increased by 13.8%. The good performance of spending drove the increase in gross VAT, which grew by 16.9%, linking two years of strong growth (17.7% in 2021; Table 4.2 ). The profile of slowing spending throughout the year has also conditioned the evolution of gross VAT accrued, although in a different way depending on the type of taxpayer. Monthly declarations continued to show high and rising rates during the first half (around 25% on average), reducing slightly in the third quarter and falling sharply in the fourth. For their part, the quarterly statements showed, since the first quarter, lower increases than those at the end of the previous year, with the slowdown intensifying at the end of 2022.

VAT revenues grew by 13.9%, reaching 82,595 million ( Table 4.2 ). The increase would have been greater if it were not for the regulatory and management measures that, in total, represented a loss of 775 million ( Table 1.5 ). Gross income increased by 20.4%, with the growth being greater in Large Companies than in SMEs. In all cases the figures were higher than those of the accrual because the 2022 cash register does not include the accruals of the last part of the year, which had a worse performance than those of the last quarter of 2021, most of which were entered in 2022. Higher revenues associated with deferrals also impacted top-line growth.

Return requests increased by 25.5%, after growing by 14.4% in 2021. Of the 6,951 million largest requests, 6,600 million were due to monthly declarations, normally more related to exports, although in 2022 returns were also affected by price increases and, therefore, costs. VAT refunds grew by 36.7% in 2022, with high rates in both annual and monthly refunds, the pace of which was accelerated in the final stretch of the year.

Special Taxes accrued increased by 1.5% in 2022 to €20,334 million, still below (-5.7%) 2019 levels ( Table 5.1 ), although in this sense we must take into account the drastic reduction in the rate (from 5.11% to 0.5%) in the Electricity Tax, in force since September 2021. The Tax on Hydrocarbons grew by 3.1%, double that of consumption (1.5%), due to the increase in the effective rate derived from greater use of products taxed at higher rates. In fact, gasoline and diesel consumption increased by 10% and 1.3% respectively, compared to the drop in the consumption of subsidized diesel, of 6.4% ( Table 5.5 ) . Despite the improvement, the tax accrued remained lower than that achieved in 2019, except in the case of gasoline. Although global consumption continues to recover, it has been slowed down by the sharp rise in prices. In the Tax on Tobacco Products, the collection accrued increased by 8.2% (8.3% in cigarettes and 7.7% in other products; Table 5.6 ), already above the 2019 figure. This increase is explained both by greater consumption (6% of the total, 7.2% of the packs and 2.9% of the rest of the products) and by an increase in the average price before taxes (4.6% of the total, 2 .7% for packs and 11.7% for the rest of the products). The Electricity Tax fell by 76.4% ( Table 5.7 ), as a result of the aforementioned rate reduction. Despite the drop in consumption (-2%), the taxable base increased by 60.2%, driven by the strong growth in prices (52.9% before taxes). The Tax on Alcohol and Derived Beverages grew by 17.8% ( Table 5.2 ), in line with the increase in consumption, not only exceeding 2019 levels, but also registering the highest collection accrued since 2007. Something similar occurs in the Beer Tax, whose increase is estimated at 6.3% ( Table 5.3 ). The Coal Tax, which has become residual, increased by 65.8% due to the recovery of the use of this raw material in a year of uncertainty about energy sources and in a context of high prices.

Collection from Special Taxes stood at 20,224 million, 2.5% above the 2021 figures, but still 1,156 million (5.4%) less than in 2019 ( Table 5.1 ). Its growth is higher than that of the accrued tax, due to a base effect, given that the 2021 cash flow reflects the latest accruals for fiscal year 2020, which were more affected by the crisis. This is especially relevant in the Tax on Alcohol and Derived Beverages (34.5%, almost double the accrual, 17.8%).

The collection associated with figures other than the main ones totaled 10,983 million, 10% more than in 2021 ( Table 0 ). It should be noted that this increase is conditioned by the temporary suppression of the Tax on the Value of Electrical Energy Production from the third quarter of 2021. This deletion subtracted 3,399 million from 2022 income ( Table 1.5 ). The average income associated with this tax, in the years not affected by its temporary suppression, is around 1,600 million, but the fact that prices skyrocketed in the wholesale market explains the high amount of the impact. Discounting the effect of this measure, the collection associated with this group of taxes would have increased by 44%.

There are other factors that affect the comparison of these taxes, although to a lesser extent. Among the most important, it is worth mentioning the disappearance of the Canon's income from the use of continental waters for the production of electrical energy (as a result of a ruling by the Supreme Court that led to the return of the proceeds until 2021). The measures approved in the PGE-21 acted in the opposite direction, allowing for an increase in income, as is the case of the Tax on Insurance Premiums, whose impact due to the increase in the rate lasted until January 2022, or the new taxes (Tax on Financial Transactions and Tax on Certain Digital Services), which in 2022 have the collection of a full year unlike 2021, which was its first year. On the other hand, in 2022 the corresponding amounts were transferred to the Provincial Councils of the Basque Country associated with these taxes since their implementation, therefore reducing their collection.

Revenues in the Non-Resident Income Tax ( Table 6.1 ) increased by 61.7%. It must be remembered that this tax had not recovered to pre-pandemic levels due, fundamentally, to the adverse behavior of capital income. In 2022, on the other hand, these incomes have recovered much of the dynamism of yesteryear and that, together with the better results of the annual declaration, allowed us to reach a historical record of income, close to 3,000 million euros. Also having a relevant weight in this group of taxes are Taxes on Foreign Traffic ( Table 6.3 ). The collection associated with these taxes exceeded by 840 million that achieved a year before (42.9% more), driven by price increases. Revenue from the Insurance Premium Tax ( Table 6.4 ) grew by 9.6%, favored in part by the increase in the rate approved in the PGE of 2021 and whose impact lasted until January 2022, adding just over two points to the growth of this figure (46 million, Table 1.5 ).

Regarding the revenue from environmental taxes ( Table 6.2 ), as already noted, their figure in 2022 is marginal due to the elimination of the Tax on the Value of Electrical Energy Production throughout the year within the framework of measures aimed at moderating the price of electricity. It was also harmed by the making of extraordinary refunds in the Tax on the Production of Spent Nuclear Fuel. Finally, it is worth noting the increase in revenue in the Tax on Fluorinated Greenhouse Gases as a result of the regulatory change that came into force in September 2022.

The new taxes introduced last year, the Tax on Financial Transactions and the Tax on Certain Digital Services, contributed 474 million to revenues ( Table 0 ), 2.6% more than last year anus. The evolution of the first of these figures is conditioned by the lower volume of transactions on the Stock Market, with a downward trend that predates the implementation of the tax. In addition, the tax only applies to those shares of companies with a capitalization volume greater than 1,000 million, so the lower capitalization of companies also influences the loss of income. To these factors we must add the fact that the 2022 income is reduced by the regional adjustments corresponding to both that year and the previous year.

Chapter III revenue decreased by 6.4% ( Tables 1.6 and 6.6 ). The main cause of the fall was the disappearance of the Canon's income from the use of continental waters for the production of electrical energy. Collection for the rest of the fees increased by 16.7%, driven mainly by the positive evolution of the Canon for the occupation and use of the public domain, the DNI and passport Issuance Fee and the Consular Fees. As for the rest of Chapter III, the higher income from crimes was not enough to compensate for the loss derived from the lower collection of late payment interest.

Finally, it should be noted that the collection associated with other income from Chapter I doubled in 2022 as a consequence, largely, of the existence of extraordinary income.