News published in INFORMA 2017

News published in INFORMA from January-February

For the purposes of the limit stated in article 96.2 of the Personal Income Tax Act, to determine the filing obligation it is specified that income not subject to taxation shall not be considered, nor shall income subject to special taxation on certain lotteries and betting transactions.

For the purposes of increasing other employment income expenses corresponding to active employees with disabilities, the concept of what is understood by active employee is defined. The condition of temporary disability does not give the entitlement to increase this expense.

The definition of interest and other deductible financial expenses on equity capital yields is broadened to include taxation of interest paid in 2016 and in relation to which, due to the application of floor clauses, an agreement has been made to refund before the end of the Personal Income Tax filing term for that year. They will not be considered a tax-deductible expense.

The new Additional Provision 45 of the Personal Income Tax Law, introduced by RD 1/2017, regulates the taxation of amounts received as a result of the elimination of the floor clause in loans. It is established that the gross tax base shall not include amounts received in this regard or indemnification interest. However, this should be adjusted if these amounts formed part of the deduction base for investment in habitual residence or were considered expenses in prior years.

For Personal Income Tax purposes the requirement stated in article 27.2 to qualify leasing as an economic activity is not fulfilled in cases where the taxpayer has outsourced the management of subcontracted properties with third parties professionally dedicated to asset management, substituting the hiring of an employee.

Profits distributed by civil companies who have performed their accounting in accordance with the trade code in 2014 and 2015 and which being taxed for Corporation Tax from 1 January 2016, are not subject to Personal Income Tax, nor are they subject to withholding tax and income on account, in accordance with article 32.3 of the Corporation Tax Act.

Taxpayer who carries out purchase and sale transactions of financial assets in foreign currencies. The income obtained in the foreign currency must be calculated and then converted to euros at the interest rate prevailing at that time.

The reduction for irregularity of the different incomes shall not exceed 300,000 euros per year. If several irregular earnings are obtained of one and the same nature and these exceed the maximum amount, the maximum reduction shall be proportionally distributed between all the earnings of this nature.

The deduction is applied in the tax period in which the reinvested profits are earned or the following year, up to the limit of the gross tax payable for the tax period in which the profits are obtained. If in the above period taxation was on a joint basis, in the next period the limit of the tax payable must be the portion corresponding to the taxpayer making the reinvestment.