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

PERSONAL INCOME TAX

For the 2022 tax period:

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

2. The reduction taken into account to quantify the installment 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

   • At 15% of the purchase price of fertilizers

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

4. The corrective index for feed purchased from third parties is set at 0.5 and the index for crops on irrigated land that use, for this purpose, electrical energy at 0.75.

5. Taxpayers who carry out economic activities on the Island of La Palma may reduce the net yield of modules corresponding to these activities by 20%.

   This reduction will be taken into account to quantify the net performance for the purposes of the installment payment corresponding to the fourth quarter of 2022.

For the 2023 tax period:

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

2. The reduction taken into account to quantify the installment 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

   • At 15% of the purchase price of fertilizers

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

4. The corrective index for feed purchased from third parties is set at 0.5 and the index for crops on irrigated land that use, for this purpose, electrical energy at 0.75.

5. Taxpayers who carry out economic activities on the Island of La Palma may reduce the net yield of modules corresponding to these activities by 20%.

   This reduction will be taken into account to quantify the net performance for the purposes of the installment payments corresponding to 2023.

6. Direct aid decoupled from the Common Agricultural Policy (basic income aid for sustainability, complementary redistributive income aid, schemes in favor of the climate and the environment or complementary aid for young farmers) will be accumulated to the income from the crops or farms of the recipient in proportion to their respective amounts.

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

7. Taxpayers who wish to resign or revoke their resignation for the year 2023 will exercise this option from December 2 to December 31, 2022.