Still pending parliamentary ratification, and with negotiations underway to adjust, increase or adapt these or other modifications, at the end of last week, the Government finally reached an agreement to promote a tax reform in 2025 (which in some cases will also affect the 2024 fiscal year) through the approval of a Bill.

Therefore, we consider it interesting to provide, now as a summary, some of the most important changes approved, among which it should be noted that the controversial measures on the change of the tax regime of SOCIMIs are not included, nor is the elimination of the VAT exemption on private health insurance premiums -for the moment- , but the so-called Tax on the Interest and Commission margin of certain financial entities (popularly known as the Banking Tax) is approved, the Tobacco Tax is raised and a new tax on electronic cigarettes is created, with the Tax on energy companies being postponed.

Among the measures contained in the project, briefly, the main novelties are the following:

1. Personal Income Tax.

• With effect from 1 January 2025, the tax rate on savings income will be increased from 28% to 30% starting from €300,000. This tax rate was 23% until 2020, and has been progressively increased. This measure affects not only financial income but also any capital gains from the sale of assets and rights of taxpayers.

2. Corporate tax.

• Also for periods starting on or after 1 January 2025, a series of modifications and technical improvements are established to the so-called Complementary Tax to guarantee a minimum taxation level of 15% on profits for multinationals and large companies in accordance with EU Directive 2022/2523 (affects entities with a net turnover equal to or greater than 750 million euros in at least two of the four immediately preceding fiscal years).
• The percentage of reduction of the capitalization reserve is also increased from 15% to 20%.
• The corporate income tax rates are modified and reduced for small companies ("ERD") and micro-enterprises to tax rates of 17%-20%.
• With effect from tax periods beginning on or after 01-01-2024, the limits for the compensation of Negative Tax Bases (BINS) are reintroduced for taxpayers with a turnover of 20 million euros or more, which will be limited to 50% or 25% (instead of 70%), and the application of deductions to avoid double taxation with a joint limit of 50% of the full tax rate.
• The measure consisting of not including 50% of the individual negative tax bases (BINS) in the Consolidated Tax Base of the Fiscal Consolidation Groups is extended for two more years (tax periods 2024 and 2025). 

3. Value Added Tax. 

• The Government is committed to promoting the introduction of a 21% VAT rate on short-term rentals of housing to encourage their transformation into permanent rental housing in areas with high tourist saturation.