Spanish Congress Approves Tax Reforms Including Exemption for Minimum Wage Earners
Legislative changes provide direct tax deductions and address mutualists' overpayments.
The Congress of Deputies in Spain has approved an amendment that exempts minimum wage earners from personal income tax (IRPF), a decision that has been amended by government parties.
The reform will provide a direct deduction of €340 applicable through the income tax declaration for the year 2025. This exemption will not be limited to minimum wage recipients but will also benefit individuals earning up to €18,276 annually, marking a significant change from previous plans by the Ministry of Finance.
The Economic, Trade and Digital Transformation Commission in the Lower House confirmed the passing of the law regarding civil liability and insurance in motor vehicle circulation, which includes the recent amendment.
As the commission holds full legislative powers, the policy will not need to pass through a full session and will be taken directly to the Senate.
Political support for the new law came from the PSOE, Sumar, PNV, Bildu, ERC, and BNG, while the PP and Junts abstained, and Vox voted against it.
The reform introduces new deductions for taxpayers with gross employment income below €18,276.
Specifically, there will be an annual deduction of €340 when the income is equal to or less than €16,576, which is below the minimum wage.
Deductions will taper for individuals earning above this threshold, decreasing by a factor linked to income exceeding €16,576.
The financial burden of these deductions will be entirely borne by the state.
Additionally, the law includes a provision agreed upon by PSOE, Sumar, and ERC, committing the government to ensure updates to the payments that local entities receive from state taxes in 2025.
Furthermore, the law addresses the issue of overpayments made by retired mutualists for the IRPF, which were recognized by the Supreme Court.
It allows for these overpayments to be refunded in a single payment this year, rather than over the current four-year period stipulated by existing legislation.
This change concerns tax periods from 2019 and earlier that are not yet prescribed, as well as the years 2020 to 2022.
In practical terms, the amendment alters how the Tax Agency will process claims for the affected tax periods.
It modifies the forms that mutualists will use to demand tax refunds, including initiating modifications to self-assessments or refunds based on prior self-assessments for the specified periods.
Another aspect of the newly approved law includes a provision for more transparency from insurance companies regarding the establishment of premiums for taxis, particularly in cases where costs increase.
The reform will provide a direct deduction of €340 applicable through the income tax declaration for the year 2025. This exemption will not be limited to minimum wage recipients but will also benefit individuals earning up to €18,276 annually, marking a significant change from previous plans by the Ministry of Finance.
The Economic, Trade and Digital Transformation Commission in the Lower House confirmed the passing of the law regarding civil liability and insurance in motor vehicle circulation, which includes the recent amendment.
As the commission holds full legislative powers, the policy will not need to pass through a full session and will be taken directly to the Senate.
Political support for the new law came from the PSOE, Sumar, PNV, Bildu, ERC, and BNG, while the PP and Junts abstained, and Vox voted against it.
The reform introduces new deductions for taxpayers with gross employment income below €18,276.
Specifically, there will be an annual deduction of €340 when the income is equal to or less than €16,576, which is below the minimum wage.
Deductions will taper for individuals earning above this threshold, decreasing by a factor linked to income exceeding €16,576.
The financial burden of these deductions will be entirely borne by the state.
Additionally, the law includes a provision agreed upon by PSOE, Sumar, and ERC, committing the government to ensure updates to the payments that local entities receive from state taxes in 2025.
Furthermore, the law addresses the issue of overpayments made by retired mutualists for the IRPF, which were recognized by the Supreme Court.
It allows for these overpayments to be refunded in a single payment this year, rather than over the current four-year period stipulated by existing legislation.
This change concerns tax periods from 2019 and earlier that are not yet prescribed, as well as the years 2020 to 2022.
In practical terms, the amendment alters how the Tax Agency will process claims for the affected tax periods.
It modifies the forms that mutualists will use to demand tax refunds, including initiating modifications to self-assessments or refunds based on prior self-assessments for the specified periods.
Another aspect of the newly approved law includes a provision for more transparency from insurance companies regarding the establishment of premiums for taxis, particularly in cases where costs increase.
Translation:
Translated by AI
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