News from the 2023 Personal Income Tax campaign

On April 3, the Tax Agency begins the deadline to submit the Income and Assets Declaration corresponding to the 2023 financial year. Thus, in this last year, different modifications that affect both the Personal Income Tax and the Wealth Tax have been approved.

The key dates of the rental campaign:

• April 3. Start of the campaign.
• June 26th. Last day of direct debit in case the declaration turns out to be entered.
• 1st of July. Last day of submission within the voluntary period.

• A recent ruling by the Supreme Court recognises the right of workers who contributed to labour mutual societies until 1978 to request a refund of the excess taxes paid on their pensions. This ruling has allowed pensioners from various sectors to claim a refund of personal income tax, not just those in banking. The Tax Agency itself has enabled a portal where you can request the rectification of declarations for the years 2019 to 2022 without it being necessary to provide additional documentation, it is sufficient to indicate personal data and a bank account number (IBAN). Regarding the fiscal year 2023, in principle, the corrections related to said fiscal year should already appear in the tax data. Remember that you have until June 30, 2024, to request a refund for the 2019 financial year. However, asking for this rectification may imply breaking the prescription of this tax, meaning that from the date of the request, the Tax Agency would again have 4 years to review the declarations from 2019 to 2022. Portal link: https://sede.agenciatributaria.gob.es/Sede/irpf/mutualistas-solicitudes-devolucion.html
• Deduction extension for the purchase of an electric vehicle.
• This new year, the previous deduction to encourage car purchases will remain in force. A 15% deduction of the acquisition value is indicated, with a maximum base of 20,000 euros. This deduction will be applied in the year of registration, and the vehicle must be paid for by 25%. A 15% deduction will also be used to install a battery charging system with a maximum base of 4,000 euros.
• New deduction for the acquisition, from 06/30/2023, of new electric vehicles not used in economic activities (maximum deduction base of €20,000 and deduction of 15%) and, where applicable, investment in battery charging infrastructure in owned properties (maximum deduction base of €4,000 and 15% deduction).
• Deduction for donations to non-profit entities.
• The deduction is increased to deduct the price of donations in favour of non-profit entities. A deduction of 80% will be applied to the personal income tax rate on the first €250 of donations.
• Deduction for energy efficiency improvement works.
• All measures aimed at reforms that help achieve more sustainable energy consumption are extended until 31/12/2024, whether in private homes or neighbouring blocks. These measures will allow 20%, 40% or 60% of the cost of the works to be deducted from personal income tax.
• A new exemption has been derived from the CAP policy (community agricultural policy). Aid to schemes in favour of the climate and the environment (eco-regimes) has been added as exempt income to the already existing CAP aid.
• The exemption from work income in kind for delivering shares or participations to employees of emerging companies is increased to 50,000 euros (generally 12,000 euros).
• The amounts that reduce the net income from work for low incomes are increased, and the amount below which this reduction will be applied is also increased. In 2023, net income from work is equal to or less than 14,047.5 euros and 6,498 euros annually.
• In 2023, the amounts that will reduce the net returns from the economic activities of economically dependent self-employed workers who pay taxes in direct estimation were increased, and the reduction percentage is increased to 7 per cent (previously 5 per cent) of the net return for all deductible provisions and expenses that are difficult to justify for taxpayers who determine their net return by the simplified direct estimation method.
• There will be a new deduction for the acquisition, from 30/06/2023, of new electric vehicles not used in economic activities (maximum deduction base of €20,000 and 15% deduction) and, where applicable, investment in battery charging infrastructure in owned properties (maximum deduction base of €4,000 and 15% deduction).
• In 2023, the savings rate was increased again. Five sections were established. The first three sections are the same as before, but for 200,000 euros, the tax rate is 27%, when before it was 26%, and for 300,000 euros, the rate is 28%, a section that did not exist previously.
• The deduction for investment in a new or recently created company has been reworded. The deduction is increased by increasing the rate from 30% to 50%. The maximum base is increased from 60,000 to 100,000 euros, rising, in general terms, the period for subscribing for shares or participations from three to five years, counting from the constitution of the entity, and up to seven for specific categories of emerging companies.
• The maternity deduction is extended to more taxpayers, with a new one applying to women who, at the time of the child’s birth, receive contributory or assistance benefits from the unemployment protection system.
• All individuals registered as self-employed workers in the Special Regime for Self-Employed or Self-Employed Workers or in the Special Regime of Social Security for Sea Workers must declare obligatory at some point during the tax period.

The only relevant novelty is concerning the actual obligation to contribute, expanding the IP tax to securities representing the participation in own funds of any entity (even if it is non-resident), not traded on organised markets, whose assets are constituted in at least 50 per cent, directly or indirectly, for real estate located in Spanish territory. This corrects discrimination concerning the resident since the non-resident could avoid the assessment of the tax above by filing a non-resident legal entity.

As of the date of this circular, the Constitutional Court has yet to rule on the unconstitutional appeals filed against said tax. If no ruling occurs before the start of the campaign, the office recommends proceeding with the submission of the Wealth Tax declaration and then challenging it.