LISTED: The taxes that will increase in Spain in 2024
Unfortunately, 2024 will bring with it an increase in several different taxes here in Spain, from personal income tax to tax on large fortunes and a rise in social security contributions.
Looking ahead to 2024, it is estimated that the Spanish government will collect a total of 7.5 percent more in taxes than it will do in 2023.
There will be a total of 14 taxes that will increase in 2024 which will affect both citizens and companies. These include:
Personal Income Tax
Experts estimate that the government will collect €204 million more from personal income tax next year than they did this year. This is mainly due to the increase in the tax savings brackets approved this year. This increase means that capital income of less than €200,000 will now be taxed at up to 27 percent. A new 28 percent tax bracket will also be introduced for profits from investments exceeding €300,000.
The government will also collect an extra 155 million from the self-employed, this is due to the fact that taxpayers who declare personal income tax and VAT in the so-called module system will no longer be able to apply this year's 10 percent reduction in 2024 to calculate their net income. Instead, it will be reduced to 5 percent.
In total, the regional changes derived from the adaptation of the personal income tax brackets will add €170 million more.
READ ALSO: How does Spain know if I'm a tax resident?
Reduced VAT on electricity and food
Although the reduction on basic food items will continue until June 2024, health products and electricity will no longer have a special reduced VAT.
This means Spain's Tax Agency will receive around €1.016 billion from VAT on electricity in 2024, and €397 million from the reduction of VAT on wood, gas and pellets for heating.
Special taxes
The Special Tax on Electricity will increase to 5.11 percent, which will bring in an additional €1.032 billion, while the new tax on single-use plastics will add €58 million more.
Tax on large fortunes
The temporary solidarity tax on large fortunes was designed to add €21 million to the State coffers to help combat inflation. This is the extra tax on those with net assets greater than €3 million and will continue in 2024.
READ ALSO: Spain to tax the rich to offset inflation relief measures
Increase in social contributions
The changes in social security contributions will bring in a total of €1.017 billion. Most of this will derive from the replacement of the sustainability factor of public pensions with the Intergenerational Equity Mechanism (IEM), which will contribute €780 million. The rest will be part of adjusting the maximum contribution base.
The IEM is the mechanism that is designed to prevent younger generations from taking on the entire burden of retirement by distributing contributions and making the pension system stronger in the long term.
READ ALSO: Do I have to register as self-employed in Spain if I only work a few hours?
Corporate tax
The largest tax increase will come from the limitation on compensation between business groups, which will translate into €609 million extra for the State.
On the other hand, the reduction of the tax rate for companies that invoice less than €1 million will subtract €282 million from the State coffers. In addition, an agreement between PSOE and Sumar contemplates new tax measures on large companies that would add €10 billion more.
READ ALSO - Reader question: Can I be a non-resident for tax purposes with Spain's non-lucrative visa?
Tax on energy production
The exemption for Tax on the Production Value of electrical energy will end, meaning that another €1.1 billion will be collected from this too.
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Looking ahead to 2024, it is estimated that the Spanish government will collect a total of 7.5 percent more in taxes than it will do in 2023.
There will be a total of 14 taxes that will increase in 2024 which will affect both citizens and companies. These include:
Personal Income Tax
Experts estimate that the government will collect €204 million more from personal income tax next year than they did this year. This is mainly due to the increase in the tax savings brackets approved this year. This increase means that capital income of less than €200,000 will now be taxed at up to 27 percent. A new 28 percent tax bracket will also be introduced for profits from investments exceeding €300,000.
The government will also collect an extra 155 million from the self-employed, this is due to the fact that taxpayers who declare personal income tax and VAT in the so-called module system will no longer be able to apply this year's 10 percent reduction in 2024 to calculate their net income. Instead, it will be reduced to 5 percent.
In total, the regional changes derived from the adaptation of the personal income tax brackets will add €170 million more.
READ ALSO: How does Spain know if I'm a tax resident?
Reduced VAT on electricity and food
Although the reduction on basic food items will continue until June 2024, health products and electricity will no longer have a special reduced VAT.
This means Spain's Tax Agency will receive around €1.016 billion from VAT on electricity in 2024, and €397 million from the reduction of VAT on wood, gas and pellets for heating.
Special taxes
The Special Tax on Electricity will increase to 5.11 percent, which will bring in an additional €1.032 billion, while the new tax on single-use plastics will add €58 million more.
Tax on large fortunes
The temporary solidarity tax on large fortunes was designed to add €21 million to the State coffers to help combat inflation. This is the extra tax on those with net assets greater than €3 million and will continue in 2024.
READ ALSO: Spain to tax the rich to offset inflation relief measures
Increase in social contributions
The changes in social security contributions will bring in a total of €1.017 billion. Most of this will derive from the replacement of the sustainability factor of public pensions with the Intergenerational Equity Mechanism (IEM), which will contribute €780 million. The rest will be part of adjusting the maximum contribution base.
The IEM is the mechanism that is designed to prevent younger generations from taking on the entire burden of retirement by distributing contributions and making the pension system stronger in the long term.
READ ALSO: Do I have to register as self-employed in Spain if I only work a few hours?
Corporate tax
The largest tax increase will come from the limitation on compensation between business groups, which will translate into €609 million extra for the State.
On the other hand, the reduction of the tax rate for companies that invoice less than €1 million will subtract €282 million from the State coffers. In addition, an agreement between PSOE and Sumar contemplates new tax measures on large companies that would add €10 billion more.
READ ALSO - Reader question: Can I be a non-resident for tax purposes with Spain's non-lucrative visa?
Tax on energy production
The exemption for Tax on the Production Value of electrical energy will end, meaning that another €1.1 billion will be collected from this too.
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