PERSONAL INCOME TAX (IRPF)

Article 59 of the General State Budget Law for 2022 introduces the following amendments to Law 35/2006, of November 28, on Personal Income Tax and partial amendment of the laws on Corporate Tax, Non-Resident Income Tax and Wealth Tax, with effect for tax periods beginning on or after January 1, 2022 , and indefinite validity:

• Limits on reduction in the tax base of contributions to social security systems.

  are modified in relation to social security systems

  Private insurance that exclusively covers the risk of severe or high dependency:

  The total reductions made by all persons who pay premiums in favour of the same taxpayer, including those of the taxpayer himself, may not exceed 1,500 euros per year (previously the limit was 2,000 euros per year).

  Joint maximum limit

  As a joint maximum limit for contributions to social security systems, the lowest of the following amounts will be applied:

  1. 30% of the sum of net earnings from work and economic activities received individually during the fiscal year.

  2. 1,500 euros per year (previously the limit was 2,000 euros).

     As of 1 January 2022, this limit will be increased by €8,500 , provided that such increase comes from employer contributions, or from contributions by the employee to the same social security instrument (same pension plan, employer social security plan, social security mutual fund, etc.) to which the employer contributions have been made, in an amount equal to or less than the respective employer contribution (previously the limit was €8,000 and the increase had to come exclusively from employer contributions).

     The amounts contributed by the company that arise from a decision of the worker will be considered contributions by the worker.

     The individual entrepreneur's own contributions to employment pension plans or social welfare mutual funds, of which he is, in turn, the promoter and participant or mutual member, as well as those made to company social welfare plans or collective dependency insurance of which he is, in turn, the policyholder and insured, will be considered as company contributions, for the purposes of calculating this limit.

     In addition, the limit of 5,000 euros per year for premiums for collective dependency insurance paid by the company, which already existed previously, is maintained.

Article 60 of the General State Budget Law for 2022 introduces the following amendments to Law 35/2006, of November 28, on Personal Income Tax and partial amendment of the laws on Corporate Tax, Non-Resident Income Tax and Wealth Tax, with effect for tax periods beginning on or after January 1, 2022 , and indefinite validity:

• Extension of the exclusionary limits of the objective estimation method.

  The quantitative limits that have been applied in previous years and that delimit the scope of application of the objective estimation method for economic activities included in the scope of application of said method are extended for the year 2022, with the exception of agricultural, livestock and forestry activities, which have their own quantitative limit based on volume of income.

  Therefore, the general exclusion magnitudes will be the following for the year 2022:

  • Volume of income in the immediately preceding year greater than 250,000 euros for all economic activities, except agricultural, livestock and forestry activities. All the operations shall be taken into account, irrespective of whether there is a duty to issue an invoice. operations in which there is an obligation to issue an invoice when the recipient is a business, may not exceed 125,000 euros.

  • Volume of income for the set of agricultural, forestry and livestock activities exceeding 250,000 euros.

  • Volume of purchases of goods and services in the immediately preceding year, excluding acquisitions of fixed assets, exceeding 250,000 euros.

CORPORATION TAX

Article 61 of the General State Budget Law for 2022 introduces the following modifications to Law 27/2014, of November 27, on Corporate Income Tax, with effect for tax periods beginning on or after January 1, 2022 , and with indefinite validity:

• Amendment to Article 30 of Law 27/2014 on Corporate Tax, “Full tax rate and net tax rate”.

  Article 30 of Law 27/2014, of November 27, on Corporate Income Tax, is amended by article 61 One of the General State Budget Law for 2022, introducing a section 2 in article 30 which establishes that the applicable bonuses and deductions provided for in the Tax regulations will be applied to the full rate, giving rise to the net rate of the same which, in no case, may be negative.

• Regulation of minimum taxation for certain taxpayers.

  A new article 30 bis is added to Law 27/2014, of November 27, on Corporate Tax, by article 61. Two from the General State Budget Law for 2022:

  Minimum taxation:

  For taxpayers whose net turnover is at least 20 million euros during the 12 months prior to the start of the tax period or who are taxed under the tax consolidation regime regulated in Chapter VI of Title VII of Law 27/2014, regardless of their net turnover, the net quota may not be less than the result of applying 15 percent to the tax base, reduced or increased, where appropriate and as appropriate, by the amounts derived from article 105 of Law 27/2014 and reduced by the Investment Reserve regulated in article 27 of Law 19/1994, of July 6, amending the Economic and Fiscal Regime of the Canary Islands. This quota will have the character of a minimum net quota.

  The minimum net rate will not apply to taxpayers who pay taxes at the rates provided for in sections 3, 4 and 5 of article 29 of Law 27/2014 or to entities under Law 11/2009, of October 26, which regulates Listed Public Limited Companies for Investment in the Real Estate Market.

  For taxpayers who pay taxes at the rate of 15 percent as provided for in section 1 of article 29 of Law 27/2014, because they are newly created entities, the minimum net tax rate will be 10 percent of the taxable base, as indicated above, and 18 percent if they are entities that pay taxes at the tax rate provided for in the first paragraph of section 6 of article 29 of Law 27/2014 .

  In the case of cooperatives, the minimum net share may not be less than the result of applying 60 percent to the full share calculated in accordance with the provisions of Law 20/1990, of December 19, on the Tax Regime of Cooperatives.

  For entities in the Canary Islands Special Zone, the positive tax base on which the percentage is applied will not include the part thereof corresponding to operations carried out materially and effectively within the geographical area of said Zone that is taxed at the special tax rate regulated in article 43 of Law 19/1994, of July 6, amending the Economic and Fiscal Regime of the Canary Islands.

  Rules for determining the minimum net quota:

  Firstly, the full rate will be reduced by the amount of the applicable bonuses, including those regulated by Law 19/1994, of July 6, amending the Economic and Tax Regime of the Canary Islands, and by the amount of the deduction provided for in article 38 bis of Law 27/2014.

  Secondly, the deductions for double taxation regulated in articles 31, 32, 100 and the twenty-third transitional provision of Law 27/2014 will be applied, respecting the limits that are applicable in each case.

  If as a result of the above operations:

  • It is an amount lower than the minimum net quota calculated as indicated in the previous paragraphs, this amount will be considered, as an exception , the minimum net quota.

  • If the amount is higher than the minimum net quota calculated as indicated in the previous paragraphs, the remaining deductions that are applicable will be applied, with the limits applicable in each case, up to the amount of said minimum net quota.

  Deductions whose amount is determined in accordance with the provisions of Law 20/1991, of June 7, amending the fiscal aspects of the Economic Fiscal Regime of the Canary Islands, and Law 19/1994, of July 6, amending the Economic and Fiscal Regime of the Canary Islands, will be applied , respecting their own limits, even if the resulting net quota is less than the aforementioned minimum net quota .

  Amounts not deducted by application of the previous rules may be deducted in the following tax periods in accordance with the regulations applicable in each case.

• Amendment to Article 41 of Law 27/2014 on Corporate Income Tax, “Deduction of withholdings, payments on account and fractional payments”.

  Article 41 of Law 27/2014, of November 27, on Corporate Tax, is amended by article 61.Three of the General State Budget Law for 2022, incorporating in the last paragraph the concept of minimum net quota by establishing that when the sum of the withholdings on account, payments on account and fractional payments exceeds the amount of the net quota of the Tax or, where appropriate , of the minimum net quota , the tax administration will proceed to return, ex officio, the excess.

• Modification of the Special Regime for Entities Dedicated to the Leasing of Housing.

  Section 1 of article 49 of Law 27/2014, of November 27, on Corporate Tax, is amended by article 61.Four of the General State Budget Law for 2022, establishing that there will be a 40 percent bonus (previously the bonus was 85 percent) ## the part of the full quota that corresponds to the income derived from the rental of homes that meet the requirements for the application of this regime.

• Modification of the Special Tax Consolidation Regime.

  Section 1 of article 71 of Law 27/2014, of November 27, on Corporate Tax, is amended by article 61.Fifth of the General State Budget Law for 2022, indicating that the full quota of the tax group will be reduced by the amount of the deductions and bonuses provided for in Chapters II, III and IV of Title VI of Law 27/2014, as well as any other deduction that may be applicable, giving rise to the net quota thereof, clarifying that, in no case, may it be negative.

ECONOMIC ACTIVITIES TAX

Article 62 of the General State Budget Law for 2022 introduces the following modification to Royal Legislative Decree 1175/1990, of September 28, approving the Rates and Instructions of the Tax on Economic Activities, with effect for the tax periods that begin after the entry into force of this Law and indefinite validity:

• A new group 863 is added to group 86 of the second section of the Rates of the Tax on Economic Activities.

  Group 863. Journalists and other information and communication professionals.

  Share of: 115 euros.

  Note of this Group provides that taxpayers classified in this group are authorized to obtain, process, interpret and disseminate information or content through any written, oral, visual, digital or graphic means, as well as to provide advice and execute institutional or corporate communication plans.

INCOME TAX FOR NON-RESIDENTS

Article 63 of the General State Budget Law for 2022 introduces for permanent establishments the following modifications in the TRLIRNR, approved by Royal Legislative Decree 5/2004, of March 5, with effect for tax periods beginning on or after January 1, 2022 and indefinite validity:

• Amendment to sections 4, 5 and 6 of Article 19. “Full share and net share”.

  Sections 4, 5 and 6 of article 19 of the TRLIRNR are amended in the same way as the amendment to article 30 of Law 27/2014, of November 27, on Corporate Income Tax.

  Specifically, it is established that the full quota may be subject to the applicable bonuses and deductions provided for in the Corporate Tax regulations, giving rise to the net tax rate which, in no case, may be negative.

  The amount of withholdings, payments on account and fractional payments will be deductible from the net quota .

  Consequently, with these changes, section 6 makes express reference to the net amount of the Tax to indicate that when the withholdings, payments on account and fractional payments actually made exceed the net amount of the tax, the tax administration will proceed to automatically return the excess, in accordance with the provisions of article 127 of Law 27/2014, of November 27, on Corporate Tax.

• A new tenth Additional Provision is added. Minimum Taxation.

  In this new Additional Provision ten of the TRLIRNR it is established that for the purposes of the provisions of article 19 of the TRLIRNR , to determine the tax debt of the tax, the minimum taxation established in article 30 bis of Law 27/2014, of November 27, on Corporate Income Tax will apply.

VALUE ADDED TAX

Article 64 of the General State Budget Law for 2022, with effect from 1 January 2022 and indefinite validity, modifies the thirteenth transitional provision of Law 37/1992, of 28 December, on Value Added Tax (LIVA).

• Limits for the application of the simplified regime and the special regime for agriculture, livestock and fishing in the 2022 financial year.

  This amendment extends to 2022 the increase to 250,000 euros of the amount of 150,000 euros established in the thirteenth transitional provision of the LIVA, for the purposes of certain exclusion limits from the Simplified Regime and the Agriculture, Livestock and Fishing Regime.

  In relation to the Simplified Regime the exclusion limit of 250,000 euros of income volume in the immediately preceding year is established for 2022 for all business or professional activities, except agricultural, forestry and livestock activities, carried out by the taxpayer. The exclusion limit of 250,000 euros is also established for the acquisition and import of goods and services for all business or professional activities, excluding those relating to fixed assets, carried out in the immediately preceding year by the taxpayer.

  In relation to the Agriculture, Livestock and Fishing Regime the exclusion limit of 250,000 euros is established for 2022 for the acquisition and import of goods and services for all business or professional activities, excluding those relating to fixed assets, carried out in the immediately preceding year by the taxpayer.