We have summarized the changes that we consider more interesting for our clients, there are many more.

Changes for better:

1.- The general rates of tax are reduced for 2015. See the tables for 2014 and 2015 for Canary Islands below:

Taxable general base 2014

Up to €
Tax to pay

Amount over

Up to €
Rates of tax
0017707.2024.75%
17707.204382.5315300.0030.00%
33007.208972.5320400.0040.00%
53407.2017132.5366593.0047.00%
120000.2048431.2455000.0049.00%
175000.2075381.24125000.0451.00%
300000.20139131.24Over52.00%
From 2015Up toFor SpainFor the Canary IslandsAdded rate of tax
012450.009.50%9.50%19.00%
12450.0017707.2012.00%12.00%24.00%
17707.2020200.0012.00%14.00%26.00%
20200.0033007.2015.00%14.00%29.00%
33007.2034000.0015.00%18.50%33.50%
34000.0053407.2018.50%18.50%37.00%
53407.2060000.0018.50%23.50%42.00%
60000.0090000.0022.50%23.50%46.00%
90000.00Over22.50%24.00%46.50%

2.- The retentions are also reduced leaving more money in the hands of the resident tax payers. Not only the employees will benefit of a lower retention from their wages to be paid from January 2015, but also the following sources of income shown below. If you have an economic activity and you have to pay to a professional, see the lower retentions below. If the professional asks you to retain the reduced rates ask for a certificate stating the reason why (which you must keep). If you are paying  rent for your business, office, etc., retain 20% from January 2015, and 19.50% for payments made from the 12.07.2015.

Main retentions account of Income Tax (IRPF)20142015From 12.07.152016
Othe Incomes From WorkAdministrators of Companies paid as such42%37%37%35%
"Idem supra" net income previous year <100 000€42%20%19.50%19%
For courses, seminars, conferences, etc.19%19%15%15%
General Rate on Income from Savings (Interest, Dividends, Etc.)21%20%19.50%19%
Proffesional ActivitiesGeneral21%19%15%15%
When gross income prev. year <15 000€21%15%N/AN/A
When starting (initial year + 2 following ones)9%9%7%7%
Capital GainsOn investment funds21%20%19.50%19%
Monetary premiums21%20%19.50%19%
Letting of Properties21%20%19.50%19%

3.- The rates of tax on savings are also reduced in 2015 and 2016, as shown below. Consequently, not only will the interest and dividends will pay a lower rate of tax, but also when you sell properties or any other assets. The reduction is bigger when the total amount obtained from financial investments and capital gains exceeds 6000 euros (3 points), but the biggest reduction is for what is received between 24000 and 50.000 euros (5 points).

Savings Taxable baseRatesof taxon savings
Euros201420152016
Up to 60002119.519
6000 to 240002521.521
24000 to 500002721.521
Over 500002723.523

4.- The personal and family allowances (only for children or ascendant living with tax payers earning less than 8000 euros in the year) are increased as follows:

Allowances20142015
Per tax payer51515550
> At 65 increases in9181150
> 75 extra increase11221400
For 1st child under 2518362400
For 2nd child under 2520402700
For 3rd child under 2536724000
For 4th child under & over41824500
Extra allowance for under 3 years22442800
For parents over 65 or disabled9181150
For parents over 7511221400
For disabled tax payers between 33% & 65%23163000
For disabled tax payers over 65%70389000
For every deceased descendant18362400
For every deceased ascendant01150

5.- Introduction of a new exemption on the interest or profits of deposit accounts or life insurances untouched for over 5 years, which has been named as “plan de ahorro a largo plazo” (long term saving plan). The money put into it has a limit of 5000 euros per annum. This is not very relevant with the actual low interest rate, but it will be useful if it increases in the future.

6.- The pension plans can now be cashed after 10 years (but only from 2025), not only in the actual existing cases (retirement due to age or incapacity, and long term unemployment).

7.- Any capital gains for tax payers over 65 years of age will be free of capital gains tax if the amount obtained (up to a accumulative total of 240.000 euros) is reinvested into an Annuity (“Renta Vitalicia”) within 6 months after the sale. The capital gains produced on the sale of the home of the tax payer who is over 65 years of age, when he has lived there at least the last 3 years, continues to be exempt of tax as with the Law applicable in 2014, without needing any reinvestment.

8.- Exceptional tax treatment to undeclared pensions received from outside Spain.  If you have not declared any pension received outside Spain from 2010 onwards, a period of grace has been approved up to 30.06.2015. Any tax return or complementary tax return presented for this purpose will pay no surcharges or interest. Those who have presented a tax return out of due time, in the last four years, to declare these pensions can claim a rebate for any surcharges or interest paid by the referred date. If this is your case, please, contact us to study whether it is worth claiming the surcharges or interest back.

9.- From 1.01.2015, any capital gains obtained from the sale of any item bought within the last 12 months (shares, properties, etc.), will pay tax at the rates of the savings, which are normally lower than the general rates, and will be able to compensate with losses of sales over one year. Therefore, we go back again to the scenario we had prior to 2013, where all the capital gains go to the same Saving Base irrespective of the time you have had the asset before selling it.

10.- Special new benefits for disabilities and for big families, known as “impuestos negativos” (negative taxes). The tax payers who work and take care in their homes of disabled descendants or ascendants (having the disabled relatives personal incomes under 8000 euros per year), will have a deduction of 1200 euros per annum per disabled person. This money can also be requested to be paid monthly in advance by the tax office, as already happens with the 1200 euros per year paid for maternity. The same amount will be paid to the working parents when having “familia numerosa” (normally from 3 children under 25 studying and without relevant incomes), but only 1200 euros in total for both parents. This amount will double when the “familia numerosa” is of special category (normally from 5 children under 25). And all these deductions (or payments in advance) can be accompanied by the maternity deduction.

11.- Higher tax deductions for donations made to many entities, which are increased from 25% to 70% for the first 150 euros donated per year, and from 25% to 30% for what is over 150 euros (which will be 35% for donations that have been given for at least 3 years). This change was introduced with the 5th Final Disposition of the Law 27/2014.

Changes for worse:

1.- The tax exemption on the first 1500 euros of dividends from shares disappears, having to pay the due rate of tax on them (a minimum of 20% in 2015 and 19% in 2016, see table with rates of tax on the savings in point 3 of the changes for better).

2.- The actualization coefficient on the price of purchase of properties – used to reduce the impact of inflation when selling a property- is also disappearing, which will increase the tax on the capital gain in many cases.

3.- The other coefficient (known in Spanish as “coeficiente de abatimiento”) applicable to reduce the income tax to pay for properties bought prior to 31.12.1994, is now limited to a total and unique accumulated figure of 400.000 euros per tax payer, having to pay more when a property bought prior to the referred date is sold for more than 400.000 euros, or when the total sale value of several properties bought prior to that date exceeds the 400.000 euros.

4.- The irregular incomes which were exempt -income tax wise- for the first 40%, will only have the benefit from 1.01.15 for the first 30%

5.- The amounts to reduce the taxable base when investing in pension plans are reduced from 10000 euros (12500 when over 50 years of age) to 8000 euros in 2015, not depending on any age of the tax payer. However, the tax payer will be able to reduce the base on 2500 euros invested in pension plans for the non-working spouse, instead of 2000 euros existing until 2014.

6.- An Exit Tax is introduced for residents who have lived in Spain, at least, 10 of the last 15 years, and it only affects individuals with shares with a market value over 4.000.000 euros, or over 1.000.000 euros when having more than 25% of the shares of any particular company. If any of the previous cases occur, the person who leaves Spain will have to pay capital gains as if he were selling those shares. This Exit Tax has already been appealed to the EU, although the Law already has a much better treatment when moving within the European Union. Obviously this Exit Tax will not affect many tax payers, but it can be relevant to some actual residents in Spain.

7.- Those who are already retired and have private pension plans from which no money has been withdrawn yet, the first withdrawal must be done by a certain date to enjoy the 40% tax reduction, being some of them forced to do it by the end of 2018.

8.- The deduction from the Spanish Government applicable to those who pay a rent for the house where they live, with less than 24107.20 euros of annual income, disappears except for rentals made by 31.12.2014. A small reduction from the Canary Islands remains after this date for the referred tenants.

9.- The moduli system used by many small businesses will be very much restricted, and it will be applicable to only quite small businesses, having the rest to use the direct simplified system and to pay taxes depending on their profit (and not on a estimated figure, as happens with the moduli system). However, this change will be enforced only from 1.01.2016, and we will be reporting to our affected clients during 2015 about it.

10.- The Civil Partnerships with economic activities (not the mere rental of property/ies commonly owned) will be treated tax and accountancy wise as companies and will start paying the Corporation Tax from 2016. There is a transitory disposition ruling the liquidation of these civil partnerships during the first half of 2016, with a special tax treatment, for those who do not wish to be treated as companies.

11.- The 100% exemption for the landlords of properties rented to tenants under 30 years, for them to live in it, will not apply from 2015, even if the contract was done before. The exemption will be 60% as it existed already for older tenants.

12.- The special higher allowance for workers still employed over 65 years of age is also eliminated.

Neutral change:

1.- The shareholders working for their companies in professional activities who are forced to pay the social security as self employees (R.E.T.A. or “mutualidad”) will have to declare the income from the Company as an Economic Activity and not as an employee. There should be no significant difference, for Income Tax purposes, between one option and the other.

2.- The allowance on the wages and pensions, which was of a minimum of 2652 euros for those receiving more than 13260 euros, and a maximum of 4080 euros when under 9180 euros per year, is now of a minimum 2000 euros in 2015 for those receiving more than 14450 euros,  but with a new maximum of 5700 euros when under 11250 euros. Therefore, 652 euros worse for those receiving more than 14450 euros, but it will be 1620 euros better for those receiving less than 9180 euros.