News from the financial sectors in Spain and the Canary Islands
Austerity is becoming the “new normal” in many European countries. Spain had actually been comparitavely better off when it came to tax rises, but this was never going to last.
 Greater scrutiny will be applied to corporate and individual tax returns
 Clinica Estético Dental S.L.
Tenerife
Doctors: Dentist, Dentists |
27.01.2012 - Sure enough, the Royal Decree published on 30th December 2011 included large tax increases. They are only planned to apply for income received in 2012 and 2013, but I would not be surprised if they were kept on for longer.
Income tax at scale rates
However much you earn you will pay a higher tax rate on your income in 2012 and 2013 as the rates have increased across the board. The additional contributions are progressive so that higher earners will pay a higher percentage of extra tax. The lowest additional contribution is just 0.75 per cent for income under €17,707 but it rises to seven per cent for income over €300,000. The top rate of income is therefore now 52 per cent.
Tax on savings income
Progressive additional contributions are also being applied to the fixed rate charged on savings income (interest, capital gains, dividends, income from life assurance contracts and annuities), this time at rates ranging from two per cent to six per cent. The new tax rates for savings income are now as follows:
Up to €6,000 21 per cent
€6,000 to €24,000 25 per cent
Over €24,000 27 per cent
Considering that until the end of 2009 the rate applied to all savings income was 18 per cent, higher earners have seen their tax rate increase substantially in just a few years.
Non-residents
The flat 24 per cent rate will increase to 24.75 per cent for 2012 and 2013. The 19 per cent withholding tax rate increases to 21 per cent.
The deficit and austerity measures
New Prime Minister Mariano Rajoy was immediately faced with a budget deficit of eight per cent for 2011, well above the expected six per cent previously projected. He therefore had “no choice” but to apply extra-budgetary measures and announced almost €9 billion in spending cuts plus the tax increases which are expected to bring in around €6 billion.
On 2nd January the government said the deficit may have surpassed eight per cent in 2011 so it will have to introduce further austerity measures. Following a cabinet meeting on 5th January, a new crackdown on tax evasion was announced, which the government hopes will bring in €8.2 billion this year.
More tax inspectors will be employed; workplace inspections will rise; greater scrutiny will be applied to both corporate and individual tax returns and the size of cash payments will be limited.
All in all tax planning has become even more important if you want to protect your wealth, and you also need to make sure you only use legitimate arrangements that will stand up to the taxman’s scrutiny. For advice on tax mitigation opportunities for your income, savings, wealth and pensions speak to an experienced adviser like Blevins Franks.
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.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com
You may also contact our partner Paul Montague on Tel: 922 716 079 or Email: paul.montague@blevinsfranks.com
By Bill Blevins, Financial Correspondent, Blevins Franks
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