Accrued taxes and tax revenues

Taxes accrued grew by 8.7% in 2023 ( Table 1.4 ) thanks to an increase in the bases by 7.6% and an increase in the implicit average rate of 1.4%. In the four main figures the increase was 9.2% (Chart 1.26 and Table 1.3 ). Without the estimated differential quotas for IRPF and Corporate Tax, the taxes accrued grew by 7%.

Tax revenues grew less than taxes accrued, by 6.4%. The main reason for this discrepancy is that the taxes accrued include the fees accrued in the 2023 financial year, which are estimated to be more positive than those associated with the previous financial year and which have mostly been entered into the 2023 cash register.

As in previous years, the important role played by regulatory and management changes must be taken into account when analyzing the evolution of income. In 2023, these changes reduced cash income by 3.342 billion. 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 7.8%, a rate similar to the growth experienced by the bases.

By figures, the greatest impact was on IRPF with a cost of 3,841 million. Almost everything comes down to two measures. The first is the increase in the reduction for work income, which represented a loss of 1,726 million in withholdings for the year. The effect was seen, above all, in the SMEs and in pensions, groups where there is a greater presence of low incomes that are the beneficiaries of the measure. However, the impact of the measure was also detected in large companies, something that had not happened in other cases with similar changes. The second is the group of various measures that were approved by the CC. AA. in the part of the IRPF over which they have jurisdiction and which were mainly aimed at offsetting the effects of inflation. The character of the tax was very different in the different territories, although it basically consisted of raising the family minimums, partially deflating the rate and approving new deductions or expanding existing ones. Every year the CC. AA. They exercise these powers, but never with such a marked impact as in 2023. The negative impact on net income was valued at 1,677 million.

The rest of the measures have a very different origin. Those included in the PGE -2023 (improvement of the deduction for maternity and measures to reduce the tax on personal entrepreneurs) meant a loss of 215 million, while those coming from previous regulations (modification of the limits on contributions to pension plans and the deduction for rehabilitation works for energy efficiency) reduced income by 30 million. The annual declaration also included changes approved at the start of the campaign to exceptionally reduce the yields on which farmers pay taxes in objective estimation. Finally, the modification of the regulation of deferrals in order to facilitate them entailed a deferral of income amounting to 33 million and measures from other years with consequences in 2023 of a higher collection of 6 million.

VAT was, in relation to income, the figure most affected by the regulatory changes. The impact is estimated at 3,097 million, which represents 3.7% of the revenue collected in 2022. Of these, 2.452 billion were the result of rate cuts on energy, basic food, feminine hygiene products and contraceptives. The highest cost (1.703 billion) was caused by the reduction in rates, since January 1, on food (to 0% on products that were taxed at the super-reduced rate of 4% and from 10% to 5% on oils and pasta). In energy (electricity and gas) the 728 million impact refers to the differential effect with respect to the situation in 2022. This happens in all the measures evaluated in Table 1.5 , although it is important to note this at this point because the measures were already in force in previous years. In the electricity sector, the loss of income is being measured as the 5% rate was in force throughout 2023 compared to 2022, when that rate was only in force for half a year, and the other half year the rate was 10%. In the case of gas, the year 2023 is compared with the reduction in the rate throughout the year compared to the three months of 2022 in which the measure was present. This also applies to the Electricity Tax and the Tax on the Value of the Production of Electrical Energy. In these two taxes, the 2021 and 2022 measures were extended under the same conditions to 2023 and, therefore, no cost appears in Table 1.5. Other measures also implied a significant reduction in VAT collection: The change in deferrals meant that income amounting to 285 million was shifted to 2024, and some extraordinary refunds resulted in a loss of 421 million.

In the Corporate Tax the impact was positive (2,645 million). Around 1 billion came from the different amounts of extraordinary refunds in 2022 and 2023; In 2022, almost 2,300 million were returned (for sentences and DTA ) and in 2023 only 1,300 million were returned (for DTA ).

As regards the regulatory measures themselves, in 2023 the minimum rate of 15%, approved in the PGE -2022, came into effect in the annual declaration for groups and for companies with a turnover equal to or greater than 20 million euros, and, with effect only in 2023, the taxable base for the groups' fractional payments was calculated by adding the positive bases and 50% of the negative bases of the companies belonging to those groups. The first increased revenue by 596 million, while the second raised it by 1,098 million. Regarding the latter, it should be noted that its effect on the base was much greater than that reflected in payments. The measure represented a positive adjustment of more than 11.5 billion, although only 6 billion translated into a larger tax base and, of these, just over 3.8 billion were transformed into a higher payment. These differences are produced by the existence of three types of groups: those that had a negative base even with the adjustment; those who paid according to their base, but who without the adjustment would have had a negative base; and those who, despite the adjustment, continued to pay the minimum payment and for whom, consequently, the adjustment had no impact on the payment.

Of the other measures, two taxes that were introduced in 2023 stand out: the Tax on Non-Reusable Plastic Packaging (591 million) and the Temporary Solidarity Tax on Large Fortunes (623 million). In addition, in 2023 the fee for the use of inland waters for the production of electrical energy was recovered (81 million), which was not in force in 2022 following a ruling that annulled its previous configuration. The extraordinary refunds corresponding to the Non-Resident Income Tax (more than 450 million) also had a significant impact, although it was partially offset by the existence of other extraordinary movements in 2022. Finally, a small positive impact is computed in the Tax on Financial Transactions and in the Tax on Certain Digital Services derived from the fact that in December 2022 the adjustments with the regional territories for two years were regularized, while the adjustment in 2023 corresponded to only one year.

Moving on to analyse the behaviour of accrued taxes and income by figure, the accrued IRPF grew by 12% in 2023, as a result of the increase in gross household income by 9% and the rate by 2.8% ( Table 1.3 ). This is the third consecutive year with increases of around 12%, as a result of the positive evolution of the bases and the increases in the average rates derived mainly from the increase in average incomes and pensions.

The increase in withholdings from work and accrued economic activities reached 10.2%, due to the good performance of income (7.1%) and the higher average rate (2.8%, Table 2.3 ). The most important component, earned wages, increased by 9.3%, driven by the positive evolution of the wage bill (7.6%), which was accompanied by a moderate growth in the average rate (1.6%), affected by the reduction in the rate for the lowest incomes. Withholdings associated with private salaries grew more than those associated with the public sector, although the former showed a deceleration profile, contrary to the latter, in line with the evolution of the bases and given the similar advance of the rate in both sectors. The rate cut had a greater impact on SMEs, which is why the slowdown was more intense among this group. Withholdings from public pensions increased by 17.6% (around 19% if January is not taken into account, conditioned by the comparison with January 2022 with the last payment due to the price deviation) thanks to the increase in the pension mass and the rate, which increased by 7.5%.

Withholdings on economic activities grew by 2.9% in 2023, losing about seven points compared to 10% in the previous year, due to the negative evolution of sales by agricultural entrepreneurs, and the lower growth in gross income of professionals ( Table 2.3) . As for the fractional payments, their increase is estimated at 8.1%, almost two points below the company's income, due to the impact of the regulatory changes that included increases in expenses that are difficult to justify in the direct estimation modality and the reduction of the net income in the objective estimation.

The growth in withholding taxes on capital income was high, 18.1%, although slightly lower than that achieved in 2022 (18.8%, Table 2.1 ). The main cause of these high rates has been the sharp increase in withholding taxes on capital income subject to withholding, which after two years of strong growth (29.7% in 2023 and 28.4% in 2022), reached levels not reached since 2013. It is worth highlighting the sharp rise in withholdings associated with bank account interest and the good performance of dividends. For their part, withholdings on leases, mainly of premises, rose by 6.3%, about four points below the rate recorded the previous year, while withholdings derived from capital gains from investment funds fell by 39.1%, thus marking the lowest level in the series (231 million) since this figure was implemented.

Income in the IRPF increased by 9.9%, almost six points less than in 2022 (15.8%) and more than two points below the rate reached by the tax accrued. The main reason for this divergence is that the latter include the estimate of the accrued differential fee corresponding to the 2023 financial year, while cash income includes the income and returns corresponding to the result of the annual declaration associated with the 2022 financial year. Thus, although the positive share increased by 7%, due to the growth in 2022 of income not fully subject to withholding or payment on account (real estate income, business activities and capital gains), the refunds made increased by 14.6%, exceeding by almost 1.7 billion the amount returned the previous year and bringing the net result to a level lower by about 500 million than that of the previous year. The main cause of this evolution is found in the downward corrections of the regional rates and the increase in the family minimums and the deductions also in the regional section of the tax, changes that meant a loss of income of 1,677 million ( Table 1.5 ). It should be remembered that withholdings are calculated using a general rate and that any change in the variables of regional competence means a decrease in positive differential rates or an increase in negative ones.

Withholdings on income from work and economic activities grew by 11% in 2023, with a greater increase in those from the AA.PP. (12.6%) than those associated with the private sector (10.3%; Table 2.3). The reason for the greater growth of the former is the sharp increase in withholdings linked to pensions, which have grown by around 19% since March (in February they were compared to a month in 2022 that had the last update payment), an increase that occurred even despite the effect of the rate cut on the lowest pensions. The impact of the rate cut was also felt by the SMEs whose income from withholdings grew by 7.7% (which would have been 10.2% without the rate cut). In large companies, the effect of the reduction was smaller, but it was enough to reduce the growth in revenue by one point (up 11.7%). Finally, the increase in taxes on public salaries was slightly higher than 8%.

The second largest contribution to the increase in taxes was from withholdings on income from movable capital, which increased by 26.7% thanks to the good performance of dividends and the recovery of income from withholdings on bank account interest in the wake of the rise in interest rates.

The contribution of split payments from personal companies was also positive, growing by 7.6% in 2023. The increase would have been greater, up to 10% (in line with the estimated increase for the income of these companies), if the impact of regulatory changes is discounted ( Table 1.5 ).

Income from withholding taxes on leases grew by 6.7%, showing a gradual deceleration profile throughout the year. For its part, income associated with withholdings on investment funds fell by 44.7%, reducing its amount to a level similar to that observed in the period between 2016 and 2020, after the good results observed in 2021 (the highest in the series) and 2022.

Finally, it should be noted that the returns associated with the Allocation to the Catholic Church were around 230 million less than those made a year earlier, positively affecting income. The reason for this difference is that in 2022 the usual pattern of the annual settlement of this Allowance was broken again. This settlement was usually made in January for the outstanding balances from the declaration from two years prior. However, the 2021 tax, which should have been paid in January 2023, was brought forward to December 2022.

The Corporate Tax accrued increased by 22.5% in 2023, 13.7% without the differential rate ( Table 3.1 ). The evolution of fractional payments, the main component of the tax, explains this result. Payments grew by 15.2% (14.6% consolidated groups, 17.8% Companies not belonging to groups and 12.3% ). The split payments have already seen three years of strong increases, driven in part in 2023 by the regulatory change that affected the calculation of the tax bases of groups.

Income from Corporate Tax increased by 9% ( Table 3.1 ), with split payments and income from the annual declaration being the two concepts that drove the increase. The former grew by 15.2%, in line with the benefits associated with the split payments of large companies and groups.

For its part, annual tax return revenues increased by 12.1%. Income from the liquidation of the 2022 financial year rose by 11.3%, which is explained by the growth in profits in 2022 of companies, excluding collective investment institutions, with a peculiar evolution due to their activity and with little weight in income as they are taxed at 1% ( Table 3.1 ). Added to this is the effect of the new minimum rate of 15% applicable to groups and other companies with a turnover of more than 20 million, a measure that, when approved in the 2022 Budget, had its first effect in the 2022 financial year, the declaration of which was submitted in 2023.

Finally, it is worth noting the importance of the returns of the result of the annual declaration (including settlements) in 2023, which exceeded the already high returns of 2022 by 21% ( Table 3.3 ). The reasons are two: the existence of a large volume of refund requests from the 2021 tax year, most of which were paid in 2023, and the advance in the schedule for making refunds for the 2022 campaign.

The VAT accrued in the period grew by 2.4%, growth lower than the subject final expenditure (7.1%), due to the reduction of the type derived from discounts on food, electricity and gas. The VAT accrued experienced a similar increase.

The VAT gross accrued ended the year with zero growth ( Table 4.2 ), after beginning it following the path of gradual deceleration that began in 2022, and despite of the moderate recovery observed in the fourth quarter of 2023. In Large Companies, gross VAT was reduced by 3.3%, while in SMEs an increase of 7.3% was observed. The divergence has to do with the way in which the rate reductions are carried out (these affect large companies in the first instance, but subsequently the impact is reduced by reducing the VAT borne by the SMEs ) and with the profile of the two types of companies (the first with greater weight in the energy sectors).

From another perspective, it should be noted that the VAT gross accrued with income key was reduced by 1.4%, while the accrual associated with deferrals, recognition of debt with request for compensation or inability to pay, increased by just over 1,700 million, due to the changes introduced in the regulation of deferrals.

There was also a different behaviour in refund requests between monthly requests (mainly linked to large companies and exports), which fell by 9.3%, and annual requests ( SMEs ), which increased by 10.1%. Overall, the total amount requested was reduced by 5.7%.

In terms of cash, gross income also remained stable in 2023, although the slowdown in collection from self-assessments was greater than in accruals, especially in SMEs, a fact that can be explained by the mechanics of the tax itself. On the other hand, the revenue associated with deferrals increased by 11.9%, driven by the aforementioned increase in the number of deferrals requested that were paid in the same year. The deferred revenue from this change, which will be collected and carried over to 2024, is estimated to amount to 285 million ( Table 1.5 ).

For their part, refunds made for VAT decreased by 3.8%, which contrasts with the almost 6% decrease in refund requests. Part of the discrepancy is due to the fact that rate cuts have an immediate impact on gross revenues, but a delayed impact on the returns made.

The Excise Taxes accrued increased by 3% in 2023 to 20,896 million euros ( Table 5.1 ). The Hydrocarbon Tax increased by 0.1%, despite the fall in aggregate consumption (-1.2%), due to the increase in the effective rate resulting from greater use of products taxed at higher rates. In this regard, the consumption of gasoline and bioethanol increased by 5.9%, driven by the fall in prices, while the consumption of other products decreased, especially the consumption of subsidized diesel (-10%) which includes heating oil, the evolution of which is determined by temperatures. The tax on tobacco products accrued increased by 0.7% ( Table 5.6 ), with the increase being greater for other products (4.1%) than for cigarettes (0.3%). This increase in the tax accrued is driven by the increase in the average price before taxes and despite the fall in consumption of all products. The Electricity Tax was reduced by 20.1% ( Table 5.7 ), due to the downward trend in electricity consumption (-3.3%) and the significant drop in prices (-18.4% before taxes), in a context in which the reduction in the rate was extended throughout the year 2023. The Tax on Alcohol and Derived Beverages was reduced by 5.1% in 2023 ( Table 5.2 ), in line with the drop in consumption, which could have been affected by the increase in the price before taxes (7%). Something similar occurs with the Beer Tax, which remained at practically identical levels to those of 2022 ( Table 5.3 ). The Coal Tax resumed its downward trend, with a fall of 36.6% to 33 million, maintaining a residual role within the system. The Special Tax on Non-Reusable Plastic Packaging, which came into force in 2023, contributed 663 million.

Special Tax collection reached 20,757 million, 2.6% higher than the figures for 2022. Its growth was lower than that of the accrued tax, among other elements, because the 2023 cash flow only reflects 11 months of the accrual of the Special Tax on Non-Reusable Plastic Packaging, which came into force in 2023. If this tax were not taken into account, both revenue and accrued tax would register a fall of 0.3%.

The collection of figures other than the main ones reached 11,929 million in 2023, exceeding the level of 2022 by 8.6%. Of the 946 million in higher income, 623 correspond to the new Temporary Solidarity Tax on Large Fortunes ( Table 1.5 ). After deducting this amount, the increase in revenue associated with this group of taxes would be only 2.9%.

Revenues in the Non-Resident Income Tax ( Table 6.1 ) increased by 8.9%, exceeding 3 billion euros for the first time, thanks to the greater dynamism of capital income which explains the good performance of the collection by withholdings and payments on account. In gross terms, these revenues grew by 19.9%, but the existence of extraordinary returns reduced net income to 11.8%. The impact of higher returns was also felt in the revenue from the annual declaration, which fell by just over 40% despite the fact that gross income was 10.4% higher than the previous year.

Another group of taxes that contributed positively to the increase in revenue was that of environmental taxes ( Table 6.2 ), although their amount is marginal compared to the level they had before the suspension of the Tax on the Value of the Production of Electrical Energy since mid-2021, within the framework of the measures aimed at moderating the price of electricity. Growth was concentrated in the Tax on the Production of Spent Nuclear Fuel, although in comparison with a year 2022 with extraordinary returns. For the same reason, but of the opposite sign, extraordinary income in 2022, the collection of the other taxes of Chapter I was reduced (basically the Tax on Property Transfers by royal obligation and in Ceuta and Melilla and the Tax on Inheritances and Donations).

In Chapter II, revenues from the Insurance Premium Tax increased (by 4.6%, Table 1.6 and Table 6.4 ). On the other hand, the Taxes on Foreign Traffic fell by 5.6% ( Table 6.3 ) after the significant increase of the previous year (42.9%), driven by price increases. The revenue from the Financial Transactions Tax remained practically stable, while the revenue from the Tax on Certain Digital Services contributed 25 million more than the previous year. Table 1.5 of regulatory and management changes shows a small positive impact on these figures due to the fact that in 2022 the adjustments with the foral territories were regularized for two years compared to the adjustment of only one year in 2023.

Chapter revenues decreased by % (Table with uneven developments among its main aggregates. Thus, tax revenue increased by 13.9%, due to the recovery of the Fee for the use of inland waters for the production of electrical energy, which was not in force in 2022 following a ruling that annulled its previous configuration. Revenue from other fees increased by 2.4%, mainly due to the positive development of consular fees. On the other hand, the radioelectric rate had a negative contribution. As for the rest of Chapter III, its income fell by almost 9%, with a negative performance of its main components (surcharges, interest and penalties).