INCOME TAX REDUCTION FOR FARMING AND LIVESTOCK

On 05.10.2022, the Spanish Ministry of Finance has published the Order No. HFP/413/2022, which reduces the net yield index and modifies the corrective index applicable to farming and livestock in 2021, if the farming or livestock have been affected by exceptional circumstances provided in the Order (e.g.: drought):

• when the farmer or stockman has pruchased feed from third parties and

• when the farmer or stockman has used electricity for irrigation due to exceptional circumstances, includedn in the Order No. HAC/11552020.

The reductions are listed in an annex to the referred Ministerial Order and are spplicable only in the regions, provinces, territorial areas and activities considered by the aforementioned regulation.

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THE AMOUNTS RECEIVED BY A LESSOR IN A DEMAND FOR EVICTION ARE TAXED AS INCOME ON REAL ESTATE

 

On 14.12.2021 the Supreme Court declared that all the amounts obtained by a landlord in a demand of eviction are real estate capital yields and not capital gains.

The situation that leads to this sentence is the following:

The owner of a premises filed an eviction claim against a tenant who did not pay the rent. This claim was fully upheld and sentenced the defendant to:

• eviction from the premises plus

• payment of the amount owed on the date of the sentence and

• payment of the future amounts that would accrued up to the total eviction of the premises.

Some months afterwards, the landlord declared the referred amounts as a compensation, thus, as a capital gain, and integrated them into the taxable savings base.

Well, the Spanish Supreme Court has been very clear considering that the amounts recognized by the eviction sentence are income on real estate in any case, since:

• a lease contract can only terminated by a sentence recognizing the non-payment and

• this sentence does not have retroactive effects.

• In addition, article 22.1 of Personal Income Tax Law considers that any income derived from a lease must be considered real estate capital yields, regardless the name or nature of the income.

The rents paid by the evicted tenant are always income from real estate capital, regardless whether these rents are present or future.

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THE COUNCIL OF EUROPE REVIEWS THE LIST OF NON-COOPERATIVE COUNTRIES IN THE TAX FIELD

 

On 02.04.2022 the Council of Europe revised the list of non-cooperative countries and territories for tax purposes, keeping the following countries on it: Fiji, Guam, Virgin Islands, Palau, Panama, Samoa, American Samoa, Trinidad and Tobago and Vanuatu.

The list includes only the following countries and territories:

• those who have not started a dialogue on tax matters with the European Union or

• those who have failed to fulfill their commitment to introduce tax criteria of the Council of Europe into their regulations. These criteria, introduced by the Council of Europe in 2016, are aimed at fiscal transparency, fiscal equity and application of international standards aimed at avoiding erosion of tax base.

The list of non-cooperative countries and territories was created in December 2017. It is part of the European Union’s external strategy on taxation and aims to contribute to the work being done to promote good tax governance worldwide.

Finally, the list is a dynamic document that is updated twice a year. Next revision is scheduled for October 2022.

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CALCULATION OF PENALTIES FOR LATE SUBMISSION OF TAX STATEMENTS

 

Since 07.11.2021 and according to Law 11/2021, of 09.07.2021, a new system of surcharges for late submission of tax statements to the Spanish Tax Office is in force. The system can only be applied if the taxpayer has not been requested by the Spanish Tax Administration to comply with tax obligations.

The system consists of:

1. the application of an initial surcharge of 1% on the amount to be paid resulting from the liquidation, plus
2. an additional 1% for each full month of delay, up to the lapse of 12 months from the deadline of voluntary submission of the correspondent tax statement.

Within these first 12 months, late payment interest is not paid.

Once 12 months have elapsed from the deadline of voluntary submission period, a surcharge of 15% plus default interest will be applied. Namely:

• Less than 1 month late………surcharge of 1%

• 1 month late..…………..surcharge of 2%

• 2 months late…………...surcharge of 3%

• 3 months late…………… 4%

• 4 months late…………… 5%

• 5 months late…………… 6%

• 6 months late…………… 7%

• 7 months late…………… 8%

• 9 months late…………… 10%

• 10 months late………….. 11%

• 11 months late…………...12%

• 12 months late…………...15% + default interest

This changes the surcharge calculation system that existed until 07.11.2021, which consisted of a percentage of 5%, 10%, 15% or 20% on the amount to be paid resulting from the liquidation, depending on whether the statement was:

• less than 3 months late

• more than 3 and less than 6 months late

• more than 6 and less than 12 months late or

• more than 12 months late

A transitory regime is also established, according to which the new system of surcharges will also be applicable to surcharges prior to 07.11.2021, provided that there is no final resolution.

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OFFSET OF INCOME TAX STATEMENTS BETWEEN SPOUSES

 

Article 97.6 of the Spanish Income Tax Law gives married taxpayers who are not legally separated the possibility of compensating

• the amount to be paid correspondent to the Income Tax declaration of one of the spouses

• with the amount to be returned correspondent to the Income Tax declaration of the other.

However, this compensation can only take place if he following requirements are fulfilled:

1. The spouse who is entitled to the refund must have accepted the aforementioned compensation expressly and in writing.

2. Both spouses must be up to date in compliance with their tax obligations.

3. None of the taxpayers can be included in a tax current account system.

4. Both statements must correspond to the same period (e.g.: 2021)

5. Both statements have to be delivered simultaneuosly.

The request of compensation has to be resolved within six months by the Spanish Tax Office.

If the resolution decides that the request is merit, the credit and the debt will be reduced to the extent of the smallest one; if the amount to be returned to one spouse is greater than the amount to be paid by the other, the Spanish Tax Office will return the difference between both amounts.

Finally, if the requirements for the compensation are not met, the Tax Office will carry out a provisional liquidation to the taxpayer, asking him to pay the debt together with the interest due.

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THE SPANISH TAX AGENCY CHANGES ITS ENABLED E-MAIL ACCESS SYSTEM

 

Communications and notifications of the Spanish Tax Agency are already being sent to a new web, in compliance with article 42.5 of Royal Decree 203/2021, of 03.30.2021.

The new communications site, which can be accessed by means of an electronic certificate or a cl@ve PIN, is the following:

https://dehu.redsara.es/

Every time a notification is sent to us, a notice will be sent in parallel to the email that we had provided to the Spanish Tax Agency. Therefore, it is highly advisable to check that the data given to the Spanish Tax Agency are up to date.

On a transitory basis, notifications and communications will continue to be sent simultaneously to this new web and to the old one.

Special attention should be given to those taxpayers who have developed a web service for massive download and notifications, since, in this case, the taxpayer must develop a new massive download service.

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INCOME TAX INNOVATIONS IN 2021: NEW DEDUCTIONS

 

If we had to name the most important innovation in 2021 Income Tax, this would be, without doubt, the introduction of three new deductions for works which improve energy efficiency of main residence. Most specifically, 2021 Income Tax Return admits the following new deductions:

1. FIRST DEDUCTION: 20% of the amounts paid for WORKS that reduce HEATING AND COOLING of the habitual residence by, at least, 7%. This deduction admits a maximum base of 5.000€
2. SECOND DEDUCTION: 40% of the amounts paid for works that reduce NON-RENEWABLE ENERGY CONSUMPTION by, at least, 30%. In this case the maximum deduction base is 7.500€
3. THIRD DEDUCTION: 60% of the amounts paid for works that improve ENERGY EFFICIENCY of dwellings located in buldings for mainly residential use. In this case, the maximum deduction base is 5.000€, though the rest may be deducted in the following four years, with the same annual limit and up to a total maximum of 15.000€ (including the amount deducted in 2021).

Evidence of energy efficiency improvement

The improvement is to be determined with basis on two ENERGY EFFICIENCY CERTIFICATES, issued by a technician of an approved inspection body: one before and one after the works.

To be deductible, the works must start on a date equal or later than 10.06.2021 and finish before 12.31.2022 (in case of the 1st and 2nd deductions) or before 12.31.2023 (in case of the 3rd deduction).

Please, note that the deduction is not applicable to the parts of housing used in business activities.

Besides, the 2nd and 3rd deductions are not applicable to elements such as garage spaces, sotrage rooms, gardens, parks, etc.

The deduction has to be applied in the tax period in which the Energy Efficiency Certificate is issued or in the period of payment, if this is prior to the issuance of the certificate.

Finally, notice that each of these deductions is incompatible with the other two.

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OPTION FOR THE SPECIAL CALCULATION METHOD OF ADVANCE CORPORATE TAX

 

If the tax profit of your company has fallen sharply this year or if your company’s result in 2021 was much higher than usual, you might be interested in calculating the advance Corporate Tax 2022 according to the special method provided in article 40.3 of the Spanish Law No. 27/2014, of November 27th of 2014. ¹

Following this method, the taxable base of the advance payment is calculated on the tax profit of the first 3, 9 or 11 months of the year (instead of being calculated on the full amount of the results of the previous one).

The rate applied to this base will be 5/7 of the usual rate applicable to the Company. That is to say: if the taxable income of the company is usually subject to a 25%, the advance payment will be 18% of the calculation base; in case of a new company with a tax rate of 15%, the advance payment will be 11% of the calculation base.

Option for the special calculation method

It is important to remember that the option for this calculation method must be explicitly requested by filling in the boxes No. 133, 621 and 642 of the Spanish tax form No. 036.

This option must be requested during the month of February 2022.

In any case, the advance payment must be done by submitting a form 202 within the first 20 calendar days of the months of April, October and December. ^{2 3}

Those companies whose base results from the installment payment turn out to be negative are not required to file the form 202.

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1Spanish Corporate Tax Law.

2In case of a group of companies it is to use the Spanish tax form is No. 222.

3If the company fiscal year did not coincide with the natural year, the advance payment would be done within the first 20 days of the 3rd, 6th and 9th months of the company fiscal year.