Law 7/2024

MAIN TAX INNOVATIONS OF LAW 7/2024

The Official State Bulletin (Boletín Oficial del Estado in spanish) of 21/12/2024 published Law 7/2024 establishing a Supplementary Tax to guarantee an overall minimum level of taxation for multinational groups and large national groups, a Tax on the interest and commission margins of certain financial institutions and a Tax on liquids for electronic cigarettes and other tobacco-related products, and amending other tax regulations.

Personal Income Tax (IRPF):

• Establishes a new exemption in Personal Income Tax (IRPF) and Inheritance and Gift Tax (ISD). The amounts paid on an extraordinary basis by employers to their employees and/or family members to cover personal injury and material damage to housing, household goods and vehicles suffered by employees and/or their family members as a result of the Isolated High Level Depression (DANA) that occurred in 2024 will be exempt from Personal Income Tax (IRPF) and Inheritance and Gift Tax (ISD). The exemption will be limited to amounts paid between 29th of October 2024 and 31st of December 2024, and up to the limit of certified damages.
• Savings tax rates for the determination of the state and regional tax liability. With effect from the 1st of January 2025, the percentage to be applied to the net savings tax base from €300,000 onwards is increased. The state tax rate is set at 15% and the regional tax rate at 15% (total 30%) in the last bracket. The savings tax rate applicable in the special regime for workers posted to Spanish territory is also set at 30% as from €300,000.
• A new reduction applicable to income from artistic activities exceptionally obtained in excess of a certain amount is established, with effect from the 1st of January 2025, and provided that certain requirements and conditions are met.
• New procedure for personal income tax refunds for contributions made by pensioners to mutual benefit societies derived from case law. The AEAT may recognise refunds derived from the application of the second transitory provision of Law 35/2006, according to the case law established by the SC, in relation to tax periods 2019 to 2022, by initiating the procedure for rectification of self-assessment, or refund initiated by self-assessment, which will be processed in accordance with the rules on tax actions and procedures set out in the General Tax Law, in the terms set out in Law 7/2024. This new procedure entails the suspension of refund procedures already initiated whose refunds are pending payment. 

Corporate Income Tax (IS):

• Taxable base. Non-deductible expenses. With effect for tax periods beginning on or after 01/01/2024, expenses arising from the accounting of the new Complementary Tax will not be considered as tax-deductible expenses. Income deriving from such accounting will not be considered as income.
• Reductions in the tax base. Capitalisation reserve. With effect for tax periods beginning on or after 01/01/2025, article 25.1 of the LIS is amended to strengthen the capitalisation reserve. Firstly, the reduction in the tax base of 15% of the amount of the increase in own funds is increased to 20%, while maintaining the same requirements. Secondly, without prejudice to the above, the taxpayer will be entitled to a reduction of 23% of the amount of the increase in own funds, provided that the total average workforce in the tax period has increased by at least 2% without exceeding 5%. This reduction may be 26.5% where the increase in the total average workforce is between 5 and 10%, and 30% where the increase is more than 10%. The increase in the workforce must be maintained for a period of 3 years from the end of the tax period to which the reduction corresponds. In addition, in general, the limit of application on the taxable base is increased to 20%, and 25% for taxpayers whose net turnover is less than one million euros.
• The general corporate income tax rate applicable to micro-companies and small companies is reduced. This reduction in tax rates will be applied progressively over three years in the case of micro-companies and five years in the case of small companies:

Entities whose net turnover in the immediately preceding tax period is less than EUR 1 million shall apply the rates in the following scale, unless they are taxed at a rate different from the general rate:
	Tax rate with effects for i.i.p.
	starting within the year 2025	starting within the year 2026	starting from 01/01/2027
a) For the part b.i. between €0 and €50,000	21 %	19 %	17 %
(b) For the remaining i.i.b. portion	22 %	21 %	20 %

 

Entities that comply with the provisions of art. 101 of the LIS (small entities) will be taxed, unless they are taxed at a rate different from the general rate:
with effects for i.p.	Tax rate
starting within the year 2025	24 %
starting within the year 2026	23 %
starting within the year 2027	22 %
starting within the year 2028	21 %
starting from 01/01/2029	20 %

Entities that are considered to be a capital entity will not be able to apply these rates.

• At the same time, the regulation of the minimum net tax liability is adapted to the new tax rates applicable to micro-enterprises and small entities.
• As for tax-sheltered cooperative societies, they will pay corporate income tax at the tax rates resulting from reducing the tax rates provided for in Article 29.1 of the LIS by three percentage points, provided that the resulting rate does not exceed 20%, except in the case of extra-cooperative results, which will be taxed at the rates provided for in Article 29.1.
• Limitations on the offsetting of tax losses for large companies. With effect for tax periods commencing on or after 01-01-2024 and which have not ended on 22-12-2024, the limit on offsetting tax losses for taxpayers whose net turnover is at least 20 million euros but less than 60 million euros will be 50% of the taxable income for the period prior to the application of the capitalisation reserve and its offset, and 25% when turnover is at least 60 million euros.
• Temporary measures in the determination of the tax base in the tax consolidation regime. The measure envisaged for tax periods commencing in 2024 and 2025, consisting of the non-inclusion in the tax base of the tax group of 50% of the individual tax losses of the entities making up said group, is extended for a further two years, for tax periods commencing in 2024 and 2025. The amounts not computed shall be included, in tenths, in the successive periods commencing on or after 1st of January 2025 and 1st of January 2026, respectively, in the computation of the tax base of the tax group. However, for tax periods beginning in 2024 and 2025, this limitation on the integration of tax losses shall not apply in the case of the individual tax bases corresponding to those foundations that are subject to the general system of this law and form part of the tax group.
• Limit on the gross tax liability for the application of double taxation deductions for large companies. With effect for tax periods commencing on or after 01-01-2024 and which have not ended on 22-12-2024, taxpayers with a net turnover of at least twenty million euros during the twelve months prior to the date on which the tax period commences will be limited to 50% of their total tax liability for double taxation relief, the joint amount applicable to deductions to avoid international double taxation (for input tax, dividends and shares in profits) and to deductions for domestic double taxation by application of the transitional regime provided for in the tax law is limited to 50% of the gross tax payable.
• New developments in the reversal of impairment losses on holdings in entities. With effect for tax periods commencing on or after 1-01-2024 and which have not ended on 22-12-2024, the reversal of impairment losses on securities representing holdings in the capital or equity of companies that have been tax deductible in the taxable base for IS in tax periods commencing before 01-01-2013, is included, at least in equal parts, in the tax base corresponding to each of the first three tax periods commencing on or after the 1st of January 2024.

Value Added Tax (VAT):

• Reduced rate of 4%. Deliveries, intra-Community acquisitions or imports of fermented milk are taxed at the rate of 4%.
• Modifications related to petrol, diesel or biofuels intended for use as motor fuels:

The VAT settlement period will coincide with the calendar month, in the case of holders of fiscal deposits of petrol, diesel or biofuels included in the objective scope of the tax on hydrocarbons, as well as businessmen or professionals who extract these products from fiscal deposits.

It clarifies who is liable to pay the VAT assimilated to the import on the extraction of the products from the tax warehouse, which will be the last depositor of the products, or the holder of the tax warehouse in the event that he is the owner of these products.

In the case of petrol, diesel and biofuels intended for use as motor fuel, the discharge of the non-customs warehousing system shall be understood to be carried out, in all cases, by the last depositor of the product to be removed from the tax warehouse, to whom the corresponding tax on mineral oils shall be charged and who shall be obliged to pay VAT on the transaction treated as an import, or by the holder of the tax warehouse if he is the owner of the product. Likewise, the last depositor of the product extracted, or the holder of the tax warehouse in the event that he is the owner of the product, will be obliged to guarantee the payment of the VAT corresponding to the subsequent taxable and non-exempt supply of the goods extracted from the tax warehouse.

Guarantee of payment of VAT. The last depositor of petrol, diesel and biofuels intended for use as fuel which are removed from the tax warehouse, or the holder of the tax warehouse in the event that he is the owner of these products, shall be obliged to establish and maintain a guarantee to ensure the payment of the VAT corresponding to the subsequent taxable and non-exempt supplies of these goods. The guarantee shall not apply where the last depositor or, where applicable, the holder of the tax warehouse has the status of authorised economic operator or reliable operator.

Other taxes:

• New Supplementary Tax to ensure an overall minimum level of taxation for multinational groups and large domestic groups. The regulation enters into force on the 22nd of December 2024 and will take effect for tax periods starting on or after the 31st of December 2023, with some exceptions. It is a direct tax of a personal nature levied on the income of entities constituting a multinational group or a large domestic group as defined by law, when they are located in a jurisdiction with an effective tax rate, calculated at the jurisdictional level, lower than the minimum tax rate, in accordance with the rules of this law, in accordance with Directive (EU) 2022/2523. It is regulated in the form of national top-up tax, primary top-up tax and secondary top-up tax.
• Repeal of the regulation of the temporary energy tax established in Article 1 of Law 38/2022, but Royal Decree-Law 10/2024 (BOE 24/12/2024) regulates the establishment of a temporary energy tax during 2025.
• Creation of the Tax on the interest and commission margins of certain financial institutions, a direct tax on the interest and commission margins obtained by credit institutions, branches of foreign credit institutions and financial credit establishments deriving from the activity they carry out in Spanish territory, in the form and under the conditions laid down in Law 7/2024, with effect for tax periods starting from 01/01/2024.

 

Barcelona, 17th of January 2025.