Royal Decree 1039/2022, of December 27, has been published, amending the Personal Income Tax Regulations, approved by Royal Decree 439/2007, of March 30, and the General Regulations of the actions and procedures of tax management and inspection and the development of the common rules of the procedures for the application of taxes, approved by Royal Decree 1065/2007, of July 27.

The purpose of this Royal Decree is, firstly, to make the necessary regulatory changes as a result of the changes introduced in Law 35/2006, of 28 November, on Personal Income Tax and the partial amendment of the laws on Corporate Tax, Non-Resident Income Tax and Wealth Tax, as regards the limits of reduction in the tax base for contributions to social security systems and the equalisation of the tax regime for pan-European individual pension products to the treatment provided for in the Tax Law for pension plans.

Furthermore, the General State Budget Law for 2023 increases, as of 1 January 2023, the amount of the reduction for obtaining employment income and the threshold from which it is applicable. In this way, as a consequence of its application, the annual gross salary from which the Personal Income Tax begins to be paid will increase, from the current 14,000 euros per year to 15,000 euros per year. This increase in the reduction extends to taxpayers with a gross annual salary of up to 21,000 euros.

In order for the amount of the aforementioned reduction to be transferred to the system of withholdings for workers applicable from 1 January 2023, it is necessary to introduce various modifications to the Personal Income Tax Regulations.