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TAXES

The tax changes in Spain in 2023 that you need to know about

The new year in Spain has brought with it a whole raft of new tax measures and changes that you should be aware of. Here's all you need to know.

The tax changes in Spain in 2023 that you need to know about
Photo: Pixabay.

There are a number of new tax measures or changes to the existing system coming into force in Spain in 2023, while other temporary taxes from 2022 have been maintained.

Here are all the changes you need to know about and how they could affect you.

IRPF

This year, the Ministry of Finance will change the way they calculate the amount of Impuesto de la Renta para las Personas Físicas (IRPF) or personal income tax, you have to pay. 

In total, more than 250,000 workers will benefit from the changes and in some cases, will save more than €1,000 per year.

The government has also raised the minimum exemption from €14,000 to €15,000 to help the most vulnerable in Spanish society.

READ ALSO: Who in Spain will save €1,000 in 2023 thanks to income tax changes?

New pension fund tax

From January 1st 2023, all workers in Spain, whether salaried or self-employed, must pay a new tax through their social security contribution to help fill up Spain’s pension fund – a move that will affect over 20 million workers.

The Intergenerational Equity Mechanism (MEI), as it’s known, will be a small social security contribution intended to help balance pension financing between generations. It is hoped that the MEI will bring in around €22 billion by 2032, when it is anticipated the new tax will be lifted. 

In simple terms, if you work in Spain and thus contribute to social security, the new tax will represent 0.6 percent of your monthly salary, however, of this 0.6 percent your employer will pay 0.5 percent and you will only pay the other 0.1 percent.

READ ALSO: The new tax all workers in Spain will pay in 2023

Wealth tax

The Spanish government will maintain its so-called ‘wealth tax’, but there will be certain changes to it this year. The tax targets those with fortunes of €3 million or more.

Three brackets that have been established are a rate of 1.7 percent for fortunes between €3 and €5.3 million, 2.1 percent for wealth between €5.3 and €10.6 million, and 3.5 percent for fortunes over €10.6 million.

Savings tax

Large savings and capital income will also be taxed at a higher rate in Spain in 2023.

For taxable income over €200,000, the rate will be increased by one percent, from 26 percent to 27 percent. In addition savings of €300,000 or more will be taxed at 28 percent.

Self-employed workers

The Local covered the ongoing changes to tax system for autónomos (self-employed people) throughout 2022, including the main change that social security contributions will now be based on real income, instead of a set amount each month. 

The government has also rejigged the thresholds, but essentially anyone earning under €1,300 per month will be paying less in social security fees, with those earning €1166.70 to €1,300 a month paying just €3 less than they do now.

Those earning between €1,300 and €1,700 will pay the same amount as they do now – €294 per month, while anyone earning over €1,700 will be paying more.

According to the government, of the three million self-employed workers in Spain 2.4 million earn under €1,700 per month, meaning that the majority will see their social security contributions staying the same or reduced.

Self-employed workers in Spain will now have to choose an income bracket based on a projection of their annual net income according to a general table of base levels set by the government.

It’s as complicated as it sounds, with some accountants even unclear on exactly how this will work, but from what do know in 2023 there will be 15 different brackets of net income to calculate your social security contributions.

Tax breaks 

Several regions have announced various tax breaks for 2023, most notably Madrid. From Q1 2023, new autónomos in Madrid will have their social security fees paid for by the government for their first year of self-employed work in the region.

Recently the region also announced that it would offer tax breaks to draw foreign investment. Under the regional plan, foreigners or expatriate Spaniards will be able to deduct 20 percent of the value of their investments in real estate or financial assets from their income tax bill.

READ ALSO: Madrid region offers tax break to draw foreign investment

VAT

The Spanish government is also keeping its VAT cuts (known as IVA in Spanish) on various products. VAT on feminine hygiene and contraceptive products has been cut from 10 percent to 4 percent, as well as the temporary tax reduction on basic foods such as bread, flour, fruits or vegetables, which will be taxed at 0 percent, and to oils and pasta, which now have VAT rates of 5 percent.

These cuts are expected to last for six months.

READ ALSO: Spain axes VAT on basic foods to ease inflation pain

Banking and energy

The headline-grabbing tax measure in 2023 is a carry-over from 2022: a temporary windfall tax on banks and energy companies designed to bring €3.5 billion in extra revenue per year to help deal with the ongoing inflationary crisis.

Energy companies, whose profits have benefited hugely from the energy crisis, will have their excess profits taxed. This will generate around €2 billion per year for state coffers, and the tax will be levied at 1.2 percent on gross income for energy companies that make more than €1 billion a year.

Similarly, there is also a temporary 4.8 percent charge on banks’ net interest income and commissions in 2023 and 2024 to fund measures to ease cost of living pressures.

READ ALSO: Spain to slap windfall taxes on banks, energy firms

Plastic tax

A new tax on non-reusable plastics is also being introduced, approved at a rate of €0.45 per kilo of single-use plastic. A study by International Financial Analysts (AFI) estimates the plastic tax could generate €300 million for the Spanish state coffers.

The tax comes as part of Spain’s Waste and Contaminated Soils Law being brought in to try and decrease the use of single-use plastics, and to reduce the waste produced in landfills by 15 percent compared to 2010 levels.

READ ALSO: How Spain’s new tax on plastics will affect you

The Spanish government hopes to cut the use of food containers and single-use plastic cups by up to 70 percent by 2030.

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For members

TAXES

How to see if you have any notifications from the Spanish tax office

The Spanish tax system can seem a little daunting, but one way to simplify things and keep your mind at ease is to stay on top of your online notifications from the tax office. Here's how to do it online.

How to see if you have any notifications from the Spanish tax office

Spanish administration is, to say the least, a little laborious. Infamous for its longwinded, time-consuming processes and systems, even completing the most rudimentary of administrative tasks can become an ordeal and take an entire morning or afternoon as you head between the town hall (ayuntamiento) and bank and police station, and probably back again.

The Spanish tax system is no different, and the various rules and regulations can be particularly confusing. If you’re new in Spain or don’t speak the language, registering yourself, paying taxes and keeping on top of all the various documents and deadlines can be a bit daunting. 

READ ALSO: Will you pay more under Spain’s new social security rates for self-employed?

Many people choose to get a ‘gestor‘, which is like an all-in-one accountant and financial advisor that should, in theory, arrange everything for you. This is particularly common among self-employed people in Spain, as the tax system is even more convoluted for autónomos, as they’re known in Spanish.

They are the first port of call in Spain for the endless bureaucratic processes that come with anything official here; intermediaries between you and the often-complicated government departments.

READ ALSO: What does a ‘gestor’ do in Spain and why you’ll need one

Despite the complicated system of tax returns, fortunately, Spain’s tax office also has a safety net to help you keep on top of your tax obligations. 

Even if you have a gestor, they could miss something and it’s a good idea to be able to check your own notifications. 

 f you’re registered as a taxpayer in Spain, you’ll be able to check any notifications and obligations you have from them online.

Here’s how to do it.

How to see if you have any notifications from the tax office in Spain

  1. The first step is going to the tax office website, which you can access here. From there, you need to click on the ‘Todas las gestiones‘ button at the right of the blue banner at the top of the page.

2. Once you’ve done that you’ll see another page that looks like the one below. From there: click ‘otros servicios‘, which is the option at the bottom of the page.

3. Next, you click on ‘Notificaciones,’ which is halfway down the menu.

READ ALSO: Spanish tax returns: A handy guide for foreigners

4. That will take you to the following screen, where you need to click ‘Consulta de notificaciones y comunicaciones.’

5. You’ll then be prompted to log-in, so you can check your notifications, on a screen like the one below. You can do this with your NIE, digital certificate or [email protected] PIN.

A digital certificate is a piece of software in Spain that you can download on your computer, allowing you to identify yourself during administrative processes. Spain is notorious for its overly laborious bureaucratic systems, but the digital certificate can save you a lot of hassle and allow you to complete many processes online, without having to go in person to the various offices and agencies.

READ MORE: What are the fines and prison sentences for tax evasion in Spain?

If you haven’t got a digital certificate, you can find out how to get one here.

READ ALSO: Access all areas: how to get a digital certificate in Spain to aid online processes

6. Once you’ve done that and logged in, you’ll be taken to the following screen, which is like a sort of notification inbox. Any unread or outstanding notifications or messages you’ve got from the tax office will be in there, and you’re able to search for past documents by number, name, type, date, and whether or not you’ve read them before.

Or, alternatively, once you’re logged in with the digital certificate, you’ll be able to see if you have any unread notifications from the little blue button with your name that shows in the top right-hand corner of the page.

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