News: Spanish government is going to raise taxes

The elections are over and although no new government has yet been formed, the interim government of Pedro Sánchez has already decided that they are going to raise taxes in Spain.

This is nothing new because it was already mentioned before the vote of no confidence in June 2018, last October in October, before the elections last Sunday and it was even mentioned in the PSOE election program. However, this increase does not apply to everyone.

The new government of Pedro Sánchez (if he is again elected prime minister of Spain) has already announced that she plans to increase taxes in Spain in 2020. But that does not apply to everyone in Spain.

The government has sent the "Plan de Estabilidad 2019-2022" or a stability program to the European Commission stating that there will be an increase in taxes with a revenue of 5.6 billion euros in 2020.

But one must read between the lines to find out that it is not a general tax increase in Spain. To avoid confusion, a distinction must be made between increasing taxes and increasing tax revenue.

It is expected that tax revenues in Spain will increase by 26 billion euros because of the improvement in the economy, something that of course cannot be described as a tax increase. As the economy grows, there is more activity, more employment, businesses earn more and so more taxes come in.

Not for everyone

The tax increase that is planned will only affect the highest incomes and large companies and therefore does not apply to all taxpayers in Spain, something that the opposition parties are proclaiming.

With regard to high incomes, this concerns less than 0.5% of all taxpayers and just over 90,000 people out of more than 19 million taxpayers. These are the high incomes that earn more than 130,000 euros per year that will now pay 47% tax instead of 45%. 99.5% of taxpayers in Spain will therefore not pay extra wage tax (IRPF).

People who earn more than 300,000 euros per year will now pay 49% tax instead of 45%. This is incidentally still lower than the 52% at the time of the crisis years between 2012 and 2015 when the PP was in power (the highest level since the 1980s).

There are also various tax measures to increase the collection of corporate income tax for large companies, whereby it must be stated that a minimum tax of 15% is required on corporate income tax. This concerns companies that have a net turnover of 20 million euros or more, not even 1% of all companies that pay taxes in Spain.

Current percentages

Spain has 5 different percentages (tipo impositivo) that are divided into segments (tramos IRPF) that deal with the wage on an annual basis (base liquidable general). The taxes must be paid to the Agencia Tributaria or Hacienda, the Spanish tax authorities.

€ 0 - € 12,450 19%

€ 12,450 - € 20,200 24%

€ 20,200 - € 35,200 30%

€ 35,200 - € 60,000 37%

€ 60,200 - € 130,000 45%

more than € 130,000 (NEW) 47%

more than € 300,000 (NEW) 49%