The Royal Decree-Law 5/2023, published in the BOE on June 29, 2023, contains tax measures in response to the war in Ukraine, support for the reconstruction of the island of La Palma and other situations of vulnerability. Highlights include the extension of tax rates in the value added tax, new deductions in the income tax for the acquisition of electric vehicles and the installation of recharging systems, accelerated depreciation in the corporate income tax and extension of tax benefits in La Palma.
Extension of tax benefits in RDL 5/2023
Royal Decree-Law 5/2023, published in the Official State Gazette (BOE) on June 29, 2023, adopts and extends a series of tax measures in response to the economic and social consequences of the Ukrainian War, as well as to support the reconstruction of the island of La Palma and other situations of vulnerability. Within this extensive legislative text, there are several measures related to Value Added Tax (VAT), Personal Income Tax (IRPF) and Corporate Tax.
Regarding VAT, Article 171 of RDL 5/2023 amends Article 172 of Royal Decree-Law 20/2022 to extend, during the second half of 2023, the application of reduced or abolished tax rates for certain foodstuffs. This includes the extension of the 0% tax rate applied to basic food products, as well as the 5% tax rate levied on olive and seed oils and pasta. However, the application of these tax rates is subject to the evolution of the year-on-year rate of underlying inflation.
In the area of Personal Income Tax, Article 189 of RDL 5/2023 introduces an additional provision in the Personal Income Tax Law, known as the fifty-eighth, with the aim of encouraging the acquisition of “plug-in” and fuel cell electric vehicles, as well as the installation of recharging infrastructures. Two new deductions are established in this sense: the deduction for the acquisition of a new electric vehicle and the deduction for the installation of battery recharging systems for electric vehicles not used in an economic activity. These deductions allow deducting 15% of the acquisition value of the electric vehicle or of the amounts paid for the installation of recharging systems, respectively.
In corporate income tax, article 190 of RDL 5/2023 amends the eighteenth additional provision of the Corporate Income Tax Law to introduce a tax incentive aimed at promoting electric vehicle recharging facilities. It establishes the possibility of depreciating on the basis of a coefficient multiplied by 2 the maximum linear depreciation coefficient provided for in the officially approved depreciation tables, investments in new electric vehicle recharging infrastructures that are affected by economic activities and come into operation in the fiscal years beginning in the years 2023, 2024 and 2025.
Finally, RDL 5/2023 also extends the tax benefits established for the Island of La Palma in relation to the Real Estate Tax (IBI) and the Tax on Economic Activities (IAE). These benefits include the exemption of IBI quotas for houses, industrial, tourist, mercantile, maritime-fishing and professional establishments, agricultural and forestry exploitations, work premises and similar damaged ones, as well as reductions in the IAE for industries of any nature, mercantile, maritime-fishing, tourist and professional establishments damaged. It also contemplates the possibility of refunding the amounts paid in the event of having paid the corresponding receipt.
In summary, RDL 5/2023 presents a wide range of tax measures that include the extension of reduced tax rates on certain foods, deductions for the acquisition of electric vehicles and the installation of recharging systems, accelerated amortization of recharging infrastructures and tax benefits in the IBI and IAE for the Island of La Palma. These measures seek to boost the economy, promote the transition to sustainable mobility and support the recovery of areas affected by crisis situations or disasters.
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