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News / Higher Taxes For Longer?

Higher Taxes For Longer?

03.08.12

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

Taxpayers in Spain started the year knowing their income tax bills were going to rise, with higher earners facing a significant increase. The

Taxpayers in Spain started the year knowing their income tax bills were going to rise, with higher earners facing a significant increase.

The scale rates of income tax have increased across the board, ranging from an additional 0.75% for income below ?17,007 to an extra 7% on income over ?300,000. This takes the top rate of tax up to 52%. In Andalucia and Catalu? it is higher at 54% and 56% respectively. Tax on savings income was hiked to 21% for income up to ?6,000, then 25% on the next ?18,000 and 27% on the excess over ?24,000.

When announced, the government promised these higher taxes would only apply for 2012 and 2013 income. However, they were implemented as part of the deficit reduction measures when the plan was to bring the deficit down to 3% in 2013.

This July the EU again eased the deficit targets for Spain, and this time also granted Spain an extra year to reach the 3% target. Since this will now not happen until 2014, it seems very likely that the higher income and savings tax rates will need to apply for that year as well. Wealth tax, meant to be temporary for 2011 and 2012, could also be extended.

A new round of measures announced in July includes an increase in the standard and reduced rates of VAT. Even with these, however, the new deficit targets are considered difficult to reach. Will Spanish taxpayers be faced with yet more tax rises over the next few years?

At Blevins Franks, our team of specialists keeps a close eye on tax legislation in Spain and the UK, so we are in a position to help our clients keep ahead of changes as much as possible. Our goal is to help our clients minimise taxation and protect their capital. Contact us now to find out about tax saving opportunities in Spain.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual must take personalised advice.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.
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