The Spanish government submitted its Budget Plan for 2019 to the European Commission. The Budget Plan includes tax measures that mainly focused on generating revenue.
Changes in existing corporate income tax
In the budget draft, the government decided to reduce the corporate tax rate from 25% to 23% for companies with annual revenue below EUR 1 million. In contrast, the government reduced the participation exemption from the current 100% to 95% for foreign dividends received by Spanish companies. Therefore, the domestic companies will receive less deduction than they used to get.
New taxes introduced
To generate more revenue in the upcoming year, several taxes are introduced in the budget plan, including:
- A minimum tax of 15% on companies and consolidated groups with annual revenue of EUR 20 million or more (18% minimum tax on companies subject to the increased 30% corporate rate - financial and hydrocarbon companies);
- A 15% tax for listed real estate investment corporations (SOCIMIs or REICs) on undistributed earnings.
- A 0.2% financial transaction tax on the acquisition of shares issued by Spanish companies listed on a regulated stock market with a market value of EUR 1 billion or more;
- A 3% digital services tax on digital service companies (domestic and foreign) with global turnover exceeding EUR 750 million and Spanish sales exceeding EUR 3 million in the previous calendar year, with the tax to be self-assessed and paid on a quarterly basis online advertising services, online intermediation services, and the sale of data generated from user-provided information;
Anti-Tax Avoidance Measure
The draft budget has also tried to bring in certain stringent anti avoidance measure as following:
- The transposition of the EU Anti-Tax Avoidance Directive, including with respect to GAAR, hybrid mismatches, interest deduction restrictions, and exit tax; and
- Various other measures to address fraud and avoidance, including strengthened criteria with respect to the tax havens list, which will be in line with international standards based on fiscal equity and transparency.
Sources: Royal Budget Plan, Ministerio de Hacienda