TAX CHANGES 2012 [06/02/2012]
These are some of the main Tax changes for 2012 introduced by the Real Decreto 20/2011, approved on 30th December 2012 regarding urgent measures on Tax and finances to correct the deficit:
NON RESIDENTS INCOME TAX
For 2012 and 2013, non residents will pay 21% instead of 19% capital gains tax when selling a property, as well as on interest or dividends obtained and 24.75% instead of 24% on income earned without permanent establishment in Spain.
RETENTIONS
There is a temporary increase, during 2012 and 2013 on the retention applicable to some incomes. These are some of the main changes:
Income retained or held on account for taxes 2012 – 2013
Income earned on the rent or sublease* of real estate (*A rental agreement or lease between a tenant and a new tenant)
Now 21 % Was 19 %
Income from professional activities (lawyers, architects, consultants…)
Now 15 % Was 15 %
Income earned from the investment of personal property assets (interest)
Now 21 % Was 19 %
Income earned from intellectual property rights and industrial property rights
Now 21 % Was 19 %
Work Income earned from the status of company administrator and member of the board of directors
Now 42 % Was 35 %
TEMPORARY WORK CONTRACTS [30/11/2011]
As explained in the previous Tax Bulletin, a new Labour Law came into effect on 26th August 2011, (Law 31/2011), Regarding Measures on Employment. Within that Legislation we found a measure related to the maximum period of temporary contracts before becoming permanent:
The workers statute regulates maximum temporary contract length in art 15.5 ET, establishing a limited period for employers in the event of hiring a worker and linking temporary contracts instead of contracting the employee with a permanent contract from the beginning.
According to workers statute act, before this new change, the workers that within a period of 30 months had been working for more than 24 months, throughout two or more joined temporary contracts, for the same or different position in the same company, became, according to the law, a permanent worker automatically.
This new law withdraws the application of that article for the next two years from the date this law came into effect (from 26th of August 2011 until 26th of August 2013)
Therefore, the joining of temporary contracts can, until the 26th of August 2013, exceed the maximum period of 30 months without the consequences contained in the workers statute act. That means that temporary contracts do not automatically turn into permanent contracts after 24 months.
However, this suspension in the period limit does not mean that the temporary contract can be made without a justified cause. The employer still has to justify why he is hiring the worker with a temporary contract instead of using a permanent one.
However, this suspension in the period limit does not mean that the temporary contract can be made without a justified cause. The employer still has to justify why he is hiring the worker with a temporary contract instead of using a permanent one.
NEW LAW FOR TRAINING CONTRACTS [04/10/2011]
A new Labour Law came into effect on 26th August 2011, (Law 31/2011), Regarding Measures on Employment which changes some characteristics of the professional training contract:
Some of the main changes are explained below:
This kind of contract is now applicable to 16 to 25 years olds (before it was only up to 21 years old) who have no recognised professional qualification or a university degree that would allow them to carry out a standard training contract.
The minimum duration of the contract is 1 year (previously it was 6 months) and the maximum is 2 years, extendible to 3 years in some cases.
As the idea behind this contract is to train the employee, they will combine theory lessons in a designated external training centre (minimum 25% of the work contract) with paid work carried out inside the company (maximum 75% of the work contract - It was 85% under the previous law)
The companies hiring an unemployed person older than 20 years old, and registered at the unemployment office from at least the 16th of August 2011, will take advantage of a reduction of 100% of the quote paid monthly to Social Security, throughout the duration of the professional training contract.
When the contract term is up, if the worker remains at the company with a permanent contract, during the next 3 years, a reduction will be applicable to the quote paid by the company to Social Security of 1500 € per year for male workers, and 1800€ per year for female workers.
NEW LAWS AGAINST THE UNDERGROUND ECONOMY [01/08/2011]
A new Government Legislation 5/2011 to confront the underground economy was passed in May 2011, with one of the most important measures becoming effective from the 1st of August 2011.
Within this Legislation we find a rise of the minimum fine for companies hiring workers and not registering them with the Social Security system from 626 to 3,126 euros.
We also see almost doubled the minimum fine for workers claiming unemployment benefit while working illegally, which will now be upto 10,000 euros, lifting the maximum sanction to 187.515 euros.
Inspections will be stepped up as part of the program, and the fines will be per unregistered worker.
The purpose of this measure is to protect workers as without a contract they they have no health and social welfare benefits or contributions towards a future pension.
MATERNITY DEDUCTION APLICABLE TO ANNUAL INCOME TAX [03/06/2011]
The 2.500 € benefit for the birth or adoption of a child that was brought into effect in 2007 has now been abolished, as from 01-01-2011.
However is still possible to apply for a reduction of 1200 € in the annual tax summary for mothers with children under the age of three.
A new order came into effect on 21st of February 2011 abolishing the 141 tax form that was used to apply for the 2.500 € benefit and replacing it with the 140 tax form.
The 140 tax form allows you to apply for an advanced payment of that reduction of 1.200 €
The amount of the deduction received by the women is 100 € per month for each child.
Women that can take advantage of this deduction are those who fulfill the following requirements:
- Women with children under 3 years old
- Women who are employed or self employed and registered with Social Security.
NEW MEASURES TO CREATE EMPLOYMENT [04/04/2011]
A new Government Legislation 1/2011 regarding Urgent Measures to promote the Transition From Short Term to Long Term Workers and Professional Retraining of Unemployed has been brought into effect.
Within this Legislation we have found an “exceptional employment program” to promote long-term work contracts.
Companies that can take advantage of these measures are those who take on a new part-time employee during the 12 months after this law becomes effective (13th of February 2011)
The employee can be hired on a temporary or a permanent contract but has to have been registered as unemployed from at least the 1st of January 2011.
Companies can make a part-time contract for:
• Employees under 30 registered as unemployed from at least the 1st of January 2011.
• Long term unemployed registered at the Unemployment Office for at least 12 months within the previous eighteen month period.
It is only valid for part time contracts, and the working day has to be between 50% and 75% that of a full time worker carrying out the same type of work.
The company is entitled to a 100% reduction in their contributions to Social Security during the following 12 months after the contract begins.
Temporary contracts must be made for a minimum period of 6 months stated in the initial contract.
TAX AND LABOUR - NEW LAW [31/01/2011]
Here are some of the main Tax changes for 2011:
A new Law was approved on 3rd of December 2010 , Law 13/2010, Regarding Measures on Tax and Labour to Promote Investment and Job Creation.
Here we explain about fast-track company set-up included under this law:
Up until now, the necessary paperwork required for the setting up of a company in Spain could take longer than 40 days.
However, under the new Law, a company with a share capital of 3.100 euros could be up and running in a day, and in the event of the share capital being between 3100 and 30.000 euros, the company could be operative in 5 working days.
What’s more, the tax required for company set up has been abolished.
And also, the company set-up acts no longer need to be published in the written press, as the Company Registry will now be notified though the net.
All these measures represent an important saving in company set-up time and costs.
Birth and adoption benefit: The 2.500 € benefit for the birth or adoption of a child that was brought into effect in 2007 has now been abolished, as from 01-01-2011.
Properties:
“Catastro values” of property increase by 1% in 2011.
Regarding the purchase of a house, used as main residence, the 9.000 euros that were deductible in the annual tax return, will no longer be deductible from 01-01-2011 for those whose annual tax income base is higher than 24.107,20 euros.
SELF EMPLOYED AND UNEMPLOYMENT BENEFIT - NEW LAW. [02/12/2010]
A new law regarding the self employed and unemployment benefit came into effect on 6th November 2010, Law 32/2010,
Here are some of the main points:
-The good news is that the self employed are now entitled to claim unemployment benefit, however as it stands this will be only one year in comparison to the two years of benefit for employees.
- The already existing self employed in the moment the law comes into effect have the option to start paying a contribution to the Social Security in order to be entitled to receive the benefit , but there is a deadline: 6th February 2011.
- Choosing this option also means that the minimum of aprox. 250€ monthly payment to the Social Security will be seen to increase by about 30€ per month
-The amount of benefit received by the self employed would be 70% of his regulatory base which is about a 560 € per month.
There is a table of periods of contribution to Social security and corresponding periods of benefit:
- The minimum contribution to Social Security is 12 months, which corresponds to 2 months of unemployment benefit
- Between 18 and 23 months of contribution, 3 months benefit
- Between 24 and 29 months 4 months benefit
- Between 30 and 35 months 5 months benefit
- Between 36 and 42 months 6 months benefit
- Between 43 and 47 months 8 months benefit
- From 48 months onwards of contribution to Social security, there is a maximum of 12 months of unemployment benefit
Given that the minimum contribution time for the self employed to be able to claim the unemployment benefit is 12 months starting from November 2010, the benefit of this new law would not be reachable until November 2011.
CHANGE IN LABOUR LAW [29/09/2010]
A new Labour Law has been approved on 17th September 2010, Law 35/2010, Regarding Urgent Measures on Labour Reform that changes the labour market. Here are some of the main changes:
- Until now in Spain, when a dismissal was considered an unfair dismissal, the worker received a severance pay of 45 days pay per year worked. However, from now on, that severance pay in many cases will be 33 days for each year worked, meaning that it will be applied at a lesser cost for the employer.
- An employer also now has the possibility to dismiss a worker due to ‘economic reasons’ in which case they would have to compensate the worker with 20 days pay per year worked. If the employer demonstrates a “current or expected loss” or a “persistent reduction of the income of the company”, that would justify the dismissal.
- The new law also brings about an increase in flexibility in the workplace, with the introduction of a reduced working day. In order to avoid the dismissal of a worker, the employer has more options available, such as decreasing working hours and salaries.
V.A.T CHANGE AND INTRA-COMMUNITY TRANSACTIONS [25/08/2010]
The VAT has undergone a major legislative revision in 2010. The amendment has brought about significant changes in the determination of the place of supply of services, but also to the fulfilment of formal obligations, including the submission of the intra-Community transactions summary tax report (Form 349)
Previously we informed yourselves of the Tax Operation Number for the European Union (NOI) and 349 form, for European transactions for companies established in the European Union. Below is an example to clarify the procedure.
THREE- WAY TRANSACTIONS
Transactions where the purchase and delivery of goods takes place between 3 different companies established in European Member States, but with only one final destination.
If company “A” is established in Spain, and sells the product to company “B” that is established in the United kingdom, and then company “B” resells this product to company “C”, that is established in Germany, company “B” is merely the intermediary.
The delivery of goods made by company “A” (Established in Spain) to the client, company “B” (Established in the United Kingdom) is an intra-Community goods transaction taking place in Spain, but not including Spanish VAT charges. Company “A” should declare it as an intra-community delivery to “B”. (In 349 the Form)
There is only one intra-Community goods delivery, therefore, there can only be one transmission charge for the 2 transactions.
