New Year Brings Changes In Spain

Are you ready for the financial adjustments 2024 brings? As of January 1, Spain introduces several key changes impacting taxes and fiscal policies.

In Spain, the start of 2024 has ushered in significant alterations to the tax system. The changes, which came into effect on January 1, will impact not only individuals but also businesses and self-employed professionals nationwide.

These adjustments are part of the government’s efforts to navigate the post-inflation and post-Ukraine invasion economic landscape.

Tax Modifications Affecting Consumers And Businesses

The Spanish government has announced modifications to up to 14 taxes as of the new year. These changes are not merely increases but a recalibration to pre-pandemic norms.

Many of these taxes had been temporarily reduced to mitigate the economic impact of inflation and the Ukraine crisis. Now, as the situation stabilizes, the government is returning to its standard tax regime.

Impact On Self-Employed Professionals

A significant change is the removal of the 10 per cent reduction in personal income tax for self-employed individuals under the module system.

This system, known as the objective estimation system, will now see these professionals paying approximately €120 million more in taxes compared to 2023.

The Spanish Treasury, acknowledging the past challenges, has still permitted a general reduction of 5 per cent in 2024. This adjustment follows a trend of temporary increases in tax reductions, which included a 15 per cent reduction in 2022 and 10 per cent in 2023.

Key Changes Starting January 1, 2024

• The VAT on electricity rises to 10 per cent. The special tax on electricity (IEE) increases from 0.5 per cent to 2.5 per cent until March 31, with another rise anticipated thereafter.
• The exemption from the tax on the value of production of electrical energy concludes.
• Platforms like Wallapop and Vinted must report to the treasury if a user exceeds 30 sales or €2,000 in sales within a year.
• Payment service providers must maintain detailed records of cross-border transactions.
• A six-month warning period starts for cars with an A environmental label, not registered two years prior, entering Madrid’s Low Emission Zone (ZBE).
• Changes in the Patronage Law, including micropatronage and increased private investment participation, are implemented.
• The Intergenerational Equity Mechanism’s (MEI) price rises to 0.7 per cent, supporting the Public Pension System.
• Adjustments in early retirement calculations for pensions exceeding the Social Security System’s maximum pension.
• Plastic manufacturers and importers must now have accredited certification for recycled components.
• New regulations for drone operators, including direct identification systems.
• Nutricore introduces a new notation method impacting breakfast cereals and olive oil, with changes in its logo and corporate image.
• Large public interest companies must prepare sustainability reports in line with the European Green Deal, Sustainable Finance Agenda, and UN Sustainable Development Goals.
• Amendments to Annex I of the International Convention against Doping in Sport update the list of prohibited substances and methods.