Tax Advisor: Approval of new tax measures on taxes

In this article we well be talking about Taxes. In the session of the Congress of Deputies on January 10, 2024, the validation of two decree-laws was approved: Royal Decree-Law 6/2023, addressing urgent measures for the implementation of the Recovery, Transformation, and Resilience Plan in various areas, and Royal Decree-Law 8/2023, dealing with the economic and social consequences of conflicts in Ukraine and the Middle East, as well as the effects of drought. In contrast, the validation of Royal Decree-Law 7/2023, which aimed to complete the transposition of Directive (EU) 2019/1158, was rejected and repealed.

The resolutions of the Congress on January 10, 2024, were published in the Official State Gazette on January 12 for general knowledge. Focusing on fiscal and tax matters, this article will systematically address the main updates of Royal Decree-Law 8/2023, which came into effect on December 29, 2023.

Income Tax for Individuals (IRPF):

Regarding the Income Tax for Individuals (IRPF), recent measures include:

1. Extension of exclusions for the objective estimation method according to the thirty-second transitory provision of the IRPF Law.
2. Establishment of deadlines for waivers and revocations, according to the second transitory provision of Royal Decree-Law 8/2023, in effect since December 29, 2023. These deadlines run from the day following the publication in the Official State Gazette of the mentioned Royal Decree-Law (published on December 28, 2023) until January 31, 2024. Waivers and revocations submitted in December 2023, before the start of this period, will be considered valid. However, affected taxpayers can adjust their choice during this period.
3. One-year extension of the application of the deduction for energy efficiency improvement works in homes, according to the Additional Provision 50th of the IRPF Law, starting from January 1, 2024.
4. Adjustment of Article 96 of the IRPF Law to allow electronic declarations with personalized assistance from the tax administration. The second additional provision of the Royal Decree-Law foresees an evaluation of these measures after the first campaign with the new wording, including surveys and reports. The results will be transferred to the Council for the Defense of the Taxpayer, which will submit a report before the publication of the order approving the declaration models for the next fiscal year, determining the form and deadlines for submission.

It is important to note that Supreme Court Judgment 953/2023 annulled the obligation to submit the IRPF declaration electronically, as established in Order HAC/277/2019. The legislative amendment in Royal Decree-Law 8/2023 is justified by the need to identify specific characteristics to impose this obligation, according to the preamble of the regulation.

Value Added Tax (VAT):

Royal Decree-Law 8/2023 extended limits for agricultural regimes in 2024, similar to the adjustment in the IRPF. This extension, valid from January 1, 2024, required a new deadline for waivers or revocations, set from December 29, 2023, to January 31, 2024. Waivers and revocations from December 2023 are valid, but affected subjects can adjust their choice during this period.

Regarding VAT rates:

– The 0% and 5% rates applicable to basic foodstuffs, along with their equivalent surcharges, were extended until June 30, 2024. Clauses conditioning this VAT rate based on the year-on-year evolution of underlying inflation were eliminated.

– The VAT rate for certain energy products temporarily set at 5% until December 31, 2023, was fixed at 10%. This measure applied until December 31, 2024, for electricity supplies, until March 31, 2024, for natural gas, and until June 30, 2024, for briquettes, pellets, and firewood.

Temporary Solidarity Tax on Large Fortunes (ITSGF):

Relevant updates include the extension of the exempt minimum to 700,000 euros for all taxpayers, the extension of ITSGF until the review of wealth taxation in the regional financing system reform, and the legal obligation to submit declarations electronically according to Law 38/2022, of December 27.

Wealth Tax (IP):

Royal Decree-Law 8/2023, dated December 27, amended the regulations on declaration submissions, allowing the possibility of imposing the obligation to submit them electronically.

Corporate Income Tax (IS):

Royal Decree-Law 8/2023, dated December 27, extended the option to carry out tax-free depreciations in investments using renewable energy, modifying the seventeenth additional provision of the Corporate Income Tax Law introduced by Royal Decree-Law 18/2022, dated October 18.

Incremental Value Tax on Urban Land (IIVTNU) or “municipal capital gains”:

Royal Decree-Law 8/2023, dated December 27, modified the maximum coefficients used to calculate the taxable base, as established in Article 107.4 of the Local Regime Law (LRHL), effective from January 1, 2024.

Other Taxes:

Special Tax on Electricity The exceptionality of Royal Decree-Law 17/2021 is softened, establishing tax rates of 2.5% and 3.8% in the first and second quarters of 2024, respectively. Minimum rates of Directive 2003/96/EC must be respected.

Tax on the value of electricity production:Royal Decree-Law 8/2023 regulates the taxable base for 2024, attenuating exceptional measures. The taxable base is determined by considering electricity production and adjusting compensations quarterly.

Temporary levies in the energy sector and financial entities: The extension until 2024 of levies approved by Law 38/2022 has been in effect since December 29, 2023. An incentive for strategic investments in 2024 is proposed, coordinated with the Autonomous Community of the Basque Country and the Foral Community of Navarre.

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