Spanish Tax changes for 2010. Final Budget approved 22/12/2009
The Spanish Budget for 2010 was approved and published in the Official Bulletin of the Spanish Government on December 26th. There are not changes from what we advanced in our posting in November and no changes either for the LEY BECKHAM, the legislation is still in force as per our last posting.
You can read the full Budget at Ley 26/2009, de 23 de diciembre, de Presupuestos Generales del Estado para el año 2010. Please continue reading to see the main changes.
Income Tax.- The rate for investment income goes from 18% to 19% on the first EUR 6,000 and 21% thereafter. I believe that this is an unnecessary change of tax policy which coupled with a strong Euro will detract new capital investments into Spain. The increase in tax revenues from this measure is something to be seen. Fortunately the SICAV regimen was not altered and investment income taxed at 1% is safe if using a SICAV.
VAT.- Starting July 1st 2010, the standard rate of VAT goes from 16% to 18%, and the reduced rate from 7% to 8%. This will affect the real estate transactions as the new rate will affect the sales of off-plan and new properties by increasing a point. This is not a good policy to encourage a recovery in property sales.
Corporation Tax.- The existing 25% lower rate applicable to SME will be further reduced to 20% for companies maintaining and creating new employment, with some limits and up to EUR 120,202.41 of annual profits. The existing 30% rate is reduced to 25% for the same companies. We welcome this reduction that may have some influence in creating new business.
Beckham Law.- The Special Regime for expatriates moving to Spain as regulated in the Spanish Income Tax Act (IRPF) section 93 is not been abolished. There is an amendment being proposed in the 2010 Budget, which includes a limitation for new applicants earning more than 600,000 Euros pa and moving to Spain after 1/1/2010.