- The bill raises income tax on the highest earners and lowers the corporate tax rate for the smallest companies.
- It also puts forward two new levies: a financial transactions tax and a tax on certain digital services.
- It is a bill, not a law: nothing changes until Parliament approves it, and the text may be amended along the way.
The Council of Ministers approved the 2019 General State Budget bill on Friday 11 January, and Finance Minister María Jesús Montero delivered it to Congress this Monday. The bill lowers the government’s growth forecast to 2.2% for the year. Parties may table amendments to the whole text until 8 February, and the debate is scheduled for 12 and 13 February.
Beyond the spending figures, the text includes a package of tax measures already known in outline from the budget agreement reached in the autumn. They mainly affect people with high incomes, large companies and certain financial and digital transactions, which is why it is worth understanding what each one proposes before it becomes final.
What changes in income tax
In the general tax base, the bill adds two points to the rate on the part of income above 130,000 euros and four points on the part above 300,000. In the savings base, which covers interest, dividends and capital gains, the top rate would rise from 23% to 27% on the part above 140,000 euros.
The final result for each taxpayer also depends on the regional rate, which varies with the region of residence, so the effect in Catalonia is not the same as elsewhere. That is why the useful comparison is the one made with your own data: how many euros of income fall above each threshold and at what rate.
Corporate tax and new levies
In corporate tax, the bill reduces the exemption on dividends and gains from subsidiaries from 100% to 95%, sets a minimum tax of 15% of the tax base for groups and for companies with turnover above 20 million euros (18% for credit institutions and hydrocarbon companies), and cuts the rate for small companies turning over less than one million from 25% to 23%.
Two new taxes are added. The financial transactions tax would charge 0.2% on purchases of shares in Spanish listed companies with a market capitalisation above 1,000 million euros. The digital services tax would apply 3% to revenue from online advertising, online intermediation and the sale of data, only to groups with 750 million euros of worldwide revenue and more than three million in Spain.
Not yet law
A bill binds no one until it is approved and published in the BOE. During its passage, thresholds, rates and application dates can change, or the whole package may not go ahead as drafted. The government needs parliamentary support that, for now, is not secured.
The sensible approach is to treat the bill as a warning of where taxation may head, not as a rule. Anyone with income near the thresholds, a corporate structure with subsidiaries or affected investments can simulate the effect with their adviser, but it is best to avoid irreversible decisions based on a text that is not yet final. In the meantime, it is reasonable to organise your own tax information, that is, income, shareholdings, planned transactions and corporate structure, so as to simulate quickly the effect of each measure if it is approved and to decide with data rather than headlines.
A tax bill points in a direction, but only the published rule sets the terms.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
