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New regulations for 2022

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Main tax innovations introduced by Order HFP/1172/2022, of November 29, which develops for the year 2023 the objective estimation method of the Personal Income Tax and the simplified special regime of the Value Added Tax

PERSONAL INCOME TAX

For the 2022 tax period:

  1. The general reduction on the net income of modules is increased from 5% to 15% for all taxpayers who determine the net income of their activity according to the objective estimation method.

  2. The reduction taken into account to quantify the fractional payment corresponding to the fourth quarter of 2022 goes from 5% to 15%.

  3. Agricultural and livestock activities may reduce the previous net yield:

    • At 35% of the purchase price of agricultural diesel

    • In 15% of the purchase price of fertilizers

    In both cases, the acquisitions must be necessary for the development of said activities, must have been made in the year 2022 and must be documented in invoices issued in said period that meet the requirements set forth in the Regulation governing billing obligations.

  4. The correction rate for feed purchased from third parties is set at 0.5 and the rate for crops on irrigated land that use electricity for this purpose is set at 0.75.

  5. Taxpayers who carry out economic activities on the island of La Palma will be able to reduce the net income from modules corresponding to these activities by 20%.

    This reduction will be taken into account when quantifying the net yield for the purposes of the fractional payment corresponding to the fourth quarter of 2022.

For tax period 2023:

  1. The general reduction on the net income of modules is increased from 5% to 10% for all taxpayers who determine the net income of their activity according to the objective estimation method.

  2. The reduction taken into account to quantify the fractional payments corresponding to 2023 goes from 5% to 10%.

  3. Agricultural and livestock activities may reduce the previous net yield:

    • At 35% of the purchase price of agricultural diesel

    • In 15% of the purchase price of fertilizers

    In both cases, the acquisitions must be necessary for the development of said activities, must have been made in the year 2023 and must be documented in invoices issued in said period that meet the requirements set forth in the Regulation governing billing obligations.

  4. The correction rate for feed purchased from third parties is set at 0.5 and the rate for crops on irrigated land that use electricity for this purpose is set at 0.75.

  5. Taxpayers who carry out economic activities on the island of La Palma will be able to reduce the net income from modules corresponding to these activities by 20%.

    This reduction will be taken into account when quantifying the net return for the purposes of the instalment payments corresponding to 2023.

  6. Direct aid decoupled from the Common Agricultural Policy (basic income support for sustainability, complementary redistributive income support, climate and environmental protection schemes or complementary aid for young farmers) will be added to the income from the recipient's crops or farms in proportion to their respective amounts.

    However, when the recipient of direct aid has obtained income from agricultural and livestock activities, other than direct aid, in an amount less than 25% of the total amount of income from such activities, the net return index to be applied to direct aid will be 0.56.

  7. Taxpayers who wish to waive or revoke their waiver for the year 2023 will be able to exercise this option from December 2 to December 31, 2022.