How will new tax policies being introduced in 2024 affect you?

Spain not only welcomed a new year last night but also a series of significant financial and regulatory changes that are set to reshape the economic landscape. These adjustments, initiated by the Spanish government, aim to address the challenges posed by post-inflation and post-Ukraine invasion scenarios.

Tax Reforms Impacting Individuals and Businesses

Spain has initiated modifications to a total of 14 taxes, effective from the beginning of the year. Contrary to being mere increases, these changes represent a recalibration to pre-pandemic norms. Many of these taxes, which were temporarily reduced to alleviate the economic impact of inflation and the Ukraine crisis, are now being reinstated as the situation stabilises.

Self-employed professionals, particularly those under the module system, face a notable alteration with the removal of the 10% reduction in personal income tax. Despite acknowledging past challenges, the Spanish Treasury has granted a general 5% reduction for 2024, resulting in self-employed individuals paying approximately €120 million more in taxes compared to the previous year.

Key Fiscal Changes Effective from 1^st January 2024

1 VAT on electricity rises to 10%, and the special tax on electricity (IEE) increases from 0.5% to 2.5% until March 31, with further increments expected thereafter.

2 The exemption from the tax on the value of production of electrical energy concludes.

3 Online platforms like Wallapop and Vinted are now required to report to the treasury if a customer exceeds 30 sales or €2,000 in sales within a year.

4 Payment service providers must maintain detailed records of cross-border transactions.

5 A six-month warning period begins for cars with an A environmental label, not registered two years prior, entering Madrid’s Low Emission Zone (ZBE).

6 Changes in the Patronage Law, including micropatronage and increased private investment participation, are implemented.

7 The Intergenerational Equity Mechanism’s (MEI) price rises to 0.7%, supporting the Public Pension System.

8 Adjustments in early retirement calculations for pensions exceeding the Social Security System’s maximum pension.

9 Plastic manufacturers and importers must now have accredited certification for recycled components.

10 New regulations for drone operators, including direct identification systems.

11 Nutricore introduces a new notation method impacting breakfast cereals and olive oil, with changes in its logo and corporate image.

12 Large public interest companies must prepare sustainability reports in line with the European Green Deal, Sustainable Finance Agenda, and UN Sustainable Development Goals.

These comprehensive changes reflect Spain's commitment to adapting to evolving economic circumstances while embracing environmentally conscious policies and regulatory frameworks. As individuals and businesses navigate these modifications, the nation looks ahead to a year of resilience, innovation, and fiscal responsibility.