The new year brings change in Spain « Euro Weekly News

Are you ready for the fiscal adjustment that will occur in 2024? As of January 1, Spain has introduced several important changes that will affect tax and fiscal policy.

In Spain, major changes to the tax system began at the beginning of 2024. The changes, which came into effect on January 1, will affect not only individuals but also businesses and self-employed workers across the country.

These adjustments are part of the government’s efforts to weather the post-inflationary and post-invasion economic situation in Ukraine.

Tax changes affecting consumers and businesses

The Spanish government has announced amendments to up to 14 taxes as of the new year. These changes are not mere increases, but a readjustment to pre-pandemic norms.

Many of these taxes had been temporarily lowered to reduce the economic impact of inflation and the Ukraine crisis. Now, as the situation stabilizes, governments are returning to a standard tax system.

Impact on self-employed people

An important change is the removal of the 10% personal income tax relief for self-employed people under the modular system.

This system, known as the objective estimation system, means these professionals will pay around €120 million more in tax compared to 2023.

Spain’s Ministry of Finance has acknowledged the challenges of the past and still granted a general tax cut of 5% in 2024. This adjustment follows a trend of temporary tax reduction increases, including a 15% tax cut in 2022 and a 10% tax cut in 2023.

Key changes starting January 1, 2024

• VAT on electricity will rise to 10%. The Special Electricity Tax (IEE) is expected to increase from 0.5% to 2.5% until March 31, with further increases thereafter.
• Tax exemption on the production value of electrical energy will be completed.
• Platforms such as Wallapop and Vinted must report to the Treasury if their users make more than 30 sales or sales of €2,000 in a year.
• Payment service providers must maintain detailed records of cross-border transactions.
• If a vehicle with an A environmental label that has not been registered for two years enters the Madrid Low Emission Zone (ZBE), a six-month warning period begins.
• Amendments to the Patronage Law will be implemented, including increased micro-patronage and private investment participation.
• The price of the Intergenerational Equity Mechanism (MEI) has increased to 0.7%, supporting the public pension system.
• Adjustments in early retirement calculations for pensions that exceed the maximum Social Security system pension.
• Manufacturers and importers of plastics must obtain certified certification for recycled parts.
• New regulations for drone operators, including direct identification systems.
• Nutricore has introduced new conventions affecting its breakfast cereals and olive oil, and has changed its logo and corporate image.
• Large utilities must produce sustainability reports in line with the European Green Deal, the Sustainable Finance Agenda and the United Nations Sustainable Development Goals.
• Amendments to Annex I of the International Convention Against Doping in Sport have updated the list of prohibited substances and methods.