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New Spanish Coalition Agrees Tax Plan

Wednesday, January 8, 2020

The Spanish Socialist Party and the Podemos movement, which will form the next governing coalition, has released their policy document, which includes plans for a corporate minimum tax, among other tax measures.

The main tax measures in the coalition agreement are as follows:

  • Changes to corporate tax to ensure large corporations pay no less than 15 percent, with financial institutions and companies in the hydrocarbon sector to pay an 18 percent minimum tax.
  • A reduction in corporate tax for small companies with turnover up to EUR1m (USD1.1m) from 25 to 23 percent.
  • A commitment to introduce a digital services tax in line with proposals set out by the European Commission.
  • A commitment to introduce a tax on financial transactions, which will apply to the purchase of shares in Spanish companies.
  • A reduction in value-added tax on veterinary services and feminine hygiene products.
  • A two percentage point increase in personal income tax for those with incomes in excess of EUR130,000, and a four percentage point increase for those with incomes in excess of EUR300,000. Currently, the top rate of personal income tax is 45 percent on income in excess of EUR60,000.
  • A four percentage point increase in capital gains tax for those with incomes above EUR140,000, from 23 to 27 percent.
  • Changes to the taxation of real estate holding companies (SOCIMIS), with a 15 percent tax to be imposed on undistributed benefits.
  • A review of the tax regime relating to cooperatives and labor societies.

The agreement also includes commitments to study the taxation of wealth with the intention of making the tax system more "fair and progressive," and to promote within the EU a carbon offset mechanism for imports. The coalition will also make changes to the participation exemption, covering payments of dividends and capital gains between related parties.

Furthermore, both parties pledge to taking a leading role at international level in the fight against cross-border tax avoidance.