Accrued taxes and tax revenues

Taxes accrued grew by 13.1% in 2022 ( Table 1.4 ). In the four main figures the increase was 13.2% (Chart 1.21 and Table 1.3 ). Given the stability of the average effective rate, growth was due exclusively to the increase in bases. The small difference between the two aggregates is explained by the fact that the positive evolution of figures such as the Non-Resident Income Tax, the Foreign Trade Tax and Insurance Premiums was largely offset by the sharp fall in revenues associated with environmental taxation, due to the temporary elimination of the Tax on the Value of Electric Energy Production.

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

One notable aspect in 2022 was the important role played by regulatory and management changes, which subtracted €7.2 billion from revenues in cash terms. Details of the measures taken into account can be found in Table 1.5 . The estimated impact is that, without these measures, revenues 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 include the regulatory changes included in the 2021 PGE and which still have effects on 2022 revenues; 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 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 rate increases for high-income individuals in the Personal Income Tax included in the PGE-21 have had an impact on the amount paid in 2022, and something similar has occurred with the limitation on the exemption of foreign income in the 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 2022, but also those that, being from previous years, alter the comparison with 2022.

As was the case in 2021, the measures with the greatest impact on tax collection in 2022 were those aimed at mitigating the rise in electricity and gas prices. Together, these measures resulted in a loss of 6.636 billion. Again, it should be remembered that this is the differential effect compared to 2021. If the impacts of 2021 and 2022 are added together to obtain the reduction in income in a calendar year, the result would be 8,241 million (this figure is not the full impact of all the measures approved in 2021 and 2022 because in some cases twelve months have not passed since they were implemented). The biggest loss was caused by the elimination of the Tax on the Value of Electric Energy Production (3.399 billion). In 2021, the tax was already suspended, first in the third quarter and later in the fourth, although in cash collection it was only noted in the income of the third in November (the fourth should have been paid in February 2022). In 2022, the elimination of the tax was in effect throughout the year. Secondly, there is the impact of 1,705 million due to the reduction in the rate (from 5.11% to 0.5%) on the Special Tax on Electricity. The measure came into effect in mid-September 2021, so the greatest impact on revenue 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 since mid-2022 the rate has been reduced to 5%. The impact therefore includes the additional period that the measure was in place in 2022 compared to 2021 and the new rate reduction. 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 revenue is greater and is offset in later 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 deducted €1.702 billion from revenue growth. Most of it was concentrated in Corporate Tax (-2,202 million). These are refunds arising from judgments (around 1.3 billion) 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 2021 PGE (1,133 million) still had a positive impact on income. This happened for two different reasons. On the one hand, the postponement of the receipt of year-end accruals to the first months of 2022. This group includes the increase in rates on work withholdings (13 million), sugary drinks and insurance premiums (75 and 46 million respectively), and new taxes (-23 million). In this case, the net effect is negative because in December 2022 the adjustment with the regional territories of the amounts collected since the entry into force of both taxes took place. On the other hand, there were measures whose effect was 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 personal income tax (352 million), the modification of the exemption on foreign income (333 million) and the increase in the rate for SOCIMIs in corporate tax (11 million).

The rest of the measures are very diverse, although their impact is not, overall, great. On the one hand, there are all those related in one way or another to COVID (168 million in total). The most significant ones are due to temporary measures with a sign opposite to that which 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 the home from the annual income tax return with effect only from October 2021 and, therefore, of very little amount (-7 million); the elimination of the Fee for the use of continental waters (-177 million) resulting, as has been said, from 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.

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

Withholdings on income from work and economic activities increased by 12.4% ( Table 2.3) . This positive development was supported by the good performance of incomes, which increased by 7.3% and by 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 rise in withholdings (up to 11.6%). Private sector tax withholdings have, once again, had a more positive evolution (13.6%), with strong increases in both large companies and SMEs. Public sector wages grew slightly less, by 7%, due to a weaker growth in wages. The rate increase explains about three points of the increase in withholdings in the case of private salaries and around two points in public salaries. As for pensions, the rate increase was around 9%. This, together with the increase in income, caused withholdings to grow by 17% in the year.

As regards corporate tax withholdings, both the split payments and the withholdings on economic activities increased at a good pace for the second year (17.7% for the former and 10.9% for the latter), thanks to the positive evolution of income.

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

Income from personal income tax grew by 15.8%, more than double the rate reached a year earlier. The main reasons behind the increase in personal income tax revenues are the increases in wages and pensions and their effective rates, the good results of the 2021 annual declaration submitted at the end of June 2022 and the increase in the profits of personal companies. The good result of the annual declaration explains part of the almost three-point increase in income compared to taxes accrued. Furthermore, it should 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 of the end of 2022, which will be collected in 2023.

Income from withholdings on work and economic activities grew by 12.6% (6.1% in 2021). The increase in the private sector was slightly higher than in the public sector (12.9% and 11.7% respectively). Within the first, income associated with SMEs was the most dynamic, with an increase of 17.3% compared to 10.7% for Large Companies. In terms of income from PA withholdings, those from salaries grew by just over 6%, while those from pensions rose to 18.3%.

The split payments of personal companies grew by 21.7%, exceeding the income of the previous year by 716 million. This has been a remarkable growth, especially considering that in 2021 they already grew by over 17%.

The annual tax return brought in 3.3 billion euros more than the previous year. The reasons for this result are two: the effect of regulatory measures (increase in rates on the savings base and modification of limits on contributions to pension plans, which totalled 691 million euros, primarily affecting taxpayers with a positive differential rate) and higher growth in income not subject to withholding and in the upper ranges of the distribution.

Income from withholding taxes on movable capital grew by 9.5%, well below the accrued withholdings, weighed down by lower dividend income associated with the accrual in December 2021 and received in 2022. The growth in revenue over the past two years has not been enough to offset the loss suffered during the pandemic, so the level reached by these withholdings in 2019 has not yet been recovered. The same does not apply to income from withholding taxes on leases, which after growing by 11.3% in 2022 have already exceeded the pre-pandemic level. Income from investment fund withholdings fell by 10.8%, following the strong growth recorded the previous year.

The 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 over 5.3 billion, of which almost 4.35 billion correspond to the higher fractional 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 based on profits (minimum payment). The increase would reach 24.4% if the extraordinary income generated in 2021 is not taken into account.

Cash income 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 tax 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 liquidation 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 are due to the poor results of 2020, but the figures for 2022 are also better than those recorded before the pandemic. Revenue growth was limited by an increase in returns (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 returns continued to show high and rising rates during the first half (around 25% on average), declining slightly in the third quarter and falling sharply in the fourth. For their part, quarterly statements showed, from the first quarter, smaller 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, which in total resulted in a loss of 775 million ( Table 1.5 ). Gross revenue increased by 20.4%, with 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 flow does not include the accruals of the last part of the year, which performed worse than those of the last quarter of 2021, most of which were entered in 2022. Higher revenues associated with deferrals also impacted gross revenue growth.

Refund requests increased by 25.5%, after growing by 14.4% in 2021. Of the 6.951 billion higher claims, 6.6 billion were due to monthly returns, which are more commonly 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.

The Excise Duties accrued increased by 1.5% in 2022 to €20,334 million, still below (-5.7%) the 2019 levels ( Table 5.1 ), although in this sense the drastic reduction in the rate (from 5.11% to 0.5%) on the Electricity Tax, in force since September 2021, must be taken into account. The Hydrocarbon Tax grew by 3.1%, twice as much as consumption (1.5%), due to the increase in the effective rate resulting from greater use of products taxed at higher rates. Indeed, gasoline and diesel consumption increased by 10% and 1.3% respectively, compared to a fall in the consumption of subsidized diesel of 6.4% ( Table 5.5 ). Despite the improvement, the tax accrued was still lower than that reached in 2019, except in the case of gasoline. Although global consumption continues to recover, it has been slowed by sharply rising prices. In the Tobacco Tax, the revenue collected increased by 8.2% (8.3% in cigarettes and 7.7% in other products; Table 5.6 ), now above the 2019 figure. This increase is explained by both greater consumption (6% total, 7.2% packs and 2.9% other products) and an increase in the average price before taxes (4.6% total, 2.7% packs and 11.7% other products). The Electricity Tax fell by 76.4% ( Table 5.7 ), as a result of the aforementioned rate reduction. Despite the fall in consumption (-2%), the taxable base increased by 60.2%, driven by strong price growth (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 the levels of 2019, but also recording the highest revenue collected since 2007. Something similar occurs with 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 in the use of this raw material in a year of uncertainty about energy sources and in a context of high prices.

Special Tax collection 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 last accruals of the 2020 financial year, 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 revenue 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 elimination of the Tax on the Value of Electric Energy Production from the third quarter of 2021. This deletion subtracted 3,399 million from 2022 revenues ( Table 1.5 ). The average revenue associated with this tax, in the years not affected by its temporary elimination, is around 1.6 billion, but the fact that prices soared in the wholesale market explains the high amount of the impact. Discounting the effect of this measure, the revenue 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 income from the Fee for the use of inland waters for the production of electrical energy (as a consequence of a Supreme Court ruling that led to the return of the amount collected until 2021). The measures approved in the PGE-21 acted in the opposite direction, allowing for an increase in revenue, such as the Tax on Insurance Premiums, whose impact due to the increase in the rate was extended until January 2022, or the new taxes (Tax on Financial Transactions and Tax on Certain Digital Services), which in 2022 have a full year's revenue, unlike 2021, which was their first year. Furthermore, in 2022, the amounts corresponding to the Basque Provincial Councils associated with these taxes were transferred since their implementation, thus reducing their collection.

Revenues in the Non-Resident Income Tax ( Table 6.1 ) increased by 61.7%. It should be remembered that this tax had not recovered its pre-pandemic levels, mainly due to the adverse performance of capital income. In 2022, however, these incomes have recovered much of their former dynamism and this, together with the best results of the annual declaration, allowed a historical record of income to be reached, close to 3,000 million euros. Also of significant importance in this group of taxes are the Taxes on Foreign Traffic ( Table 6.3 ). Tax revenue from these taxes exceeded by 840 million the figure for the previous year (42.9% more), driven by price increases. Revenue from the Tax on Insurance Premiums ( Table 6.4 ) grew by 9.6%, partly favored by the increase in the rate approved in the 2021 PGE and whose impact lasted until January 2022, adding just over two points to the growth of this figure (46 million, Table 1.5 ).

As regards 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 the Production of Electrical Energy throughout the year within the framework of the measures aimed at moderating the price of electricity. It was also affected by the implementation of extraordinary refunds on the Tax on the Production of Spent Nuclear Fuel. Finally, it should be noted that revenues from the Tax on Fluorinated Greenhouse Gases increased as a result of the regulatory change that came into force in September 2022.

The new taxes introduced last year, the Financial Transaction Tax and the Tax on Certain Digital Services, contributed 474 million to revenues ( Table 0 ), 2.6% more than last year. The evolution of the first of these figures is conditioned by the lower volume of transactions on the Stock Exchange, with a downward trend that predates the implementation of the tax. Furthermore, the tax is only applied to shares in companies with a market capitalisation of over €1 billion, so the lower market capitalisation of companies also affects the loss of income. To these factors we must add the fact that the income for 2022 is less the regional adjustments corresponding to both that year and the previous one.

revenues decreased by 6.4% ( ). The main cause of the decline was the disappearance of revenue from the fee for the use of inland waters for the production of electrical energy. Collection from other fees increased by 16.7%, driven mainly by the positive evolution of the Fee for the occupation and use of public domain, the Fee for the Issuance of DNI and Passports and Consular Fees. As for the rest of Chapter III, the higher income from crimes was not enough to offset the loss resulting from lower collection of late payment interest.

Finally, it should be noted that the revenue associated with other income in Chapter I doubled in 2022, largely due to the existence of extraordinary income.