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Tax rules are always changing. This article has now been superseded by changes in tax rules in Spain. However, you can get the latest information by downloading the very latest version of our Guide to Tax in Spain

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It is always a pleasure to announce good news and this is a significant piece of good news.  The 2015 tax rates will change in Spain and some aspects of taxation will be simplified when the draft legislation clears parliament.  From 1st January 2016 the rates will fall further.  For those of you with a technical disposition the changes are from Boletín Oficial 121/000109 which will change the Ley 35/2006 de 28 noviembre del Impuesto sobre la Renta de las Personas Fisicas (IRPF).  These changes have been announced as part of the Lagares consultation and are expected to be passed through Parliament very shortly.

These changes mean that there are end of year tax planning opportunities in 2014.

So what can we expect?  Income tax rates will change with the top rates falling by 5% in 2015 to 47% and a further 2% in 2016 to 45%.  Income tax in Catalunya and Andalusia have differing  rates but their rates are still expected to fall by the same 5% and further 2% in 2015 and 2016 respectively.  As always with tax issues there is a however.  Whilst the reductions in rates are making the headlines, the tax bands are changing with higher rate tax in particular being applied at a lower income level.

What may prove to be of more benefit is the changes to capital gains or savings tax.  These rates are proposed to be reduced and the tax bands changed.  In this case, it is much clearer that there is a benefit even for higher investment income.  We have calculated the changes on TOTAL investment income (eg from all your sources of investment income) of 30,000€ pa and 50,000€ pa as follows:

Year Tax band in € % Tax Rate Tax on €30.000 Tax on €50.000
2014 6,000 21 1,260 1,260
Next 18,000 25 4,500 4,500
Above 24,000 27 1,620 7,020
Total 2014 7,380 12,780
2015 6,000 20 1,200 1,200
Next 44,000 22 5,280 9,680
Above 50,000 24
Total 2015 6,480 10,880
2016 6,000 19 1,140 1,140
Next 44,000 21 5,040 9,240
Above 50,000 23
Total 2016 6,180 10,380

As you can see the amount of tax due will fall when these new rates are introduced.

There are also changes to share options and to corporation tax.

We strongly recommend that you take independent financial advice if you have investment income as a tax resident in Spain as there are tax planning opportunities in Spain during the remaining period of 2014 that can reduce your the amount of tax you pay.