The Government proposes changes within the preliminary draft of the General State Budgets for 2021 that affect companies and individuals.
The preliminary draft of the General State Budgets (PGE) for 2021 includes new developments in the tax field, which affect both the wealth tax, as well as that of companies and the Socimis. Although the Executive has not carried out very significant changes in taxes, it has made adjustments with which it intends to increase the progressivity of the system.
The Government intends to recover the wealth tax, although against it it has the numerous bonuses that are applied in the autonomous communities. For now, it will be indefinite, according to the Budgets, and its annual renewal will not be necessary. And for amounts greater than 10 million euros, the tax rises one point, to 3.5%.
Apart from what is collected in the public accounts, the Executive has also made other decisions that will influence the wealth tax and also the inheritance and donations tax (ISD) and the transfer of assets. The recent approval of the bill to combat tax fraud, which is being processed by parliament, includes a change in the valuation of real estate, in order to bring it as close as possible to market value, which will foreseeably suppose a source additional income.
The intention of the Executive is that the value established by the General Directorate of the Land Registry is taken as a reference, understood as the most probable price for which the property could be sold. This new reference value would be based “on all real estate sales actually carried out and formalized before a notary public”, so that it would be calculated from the sales prices provided by notaries and registrars.
The anti-fraud bill also establishes that, in living inheritances, the assets are registered at the original date and value that they had for the donor, not at the time of the agreement, which allowed the heir to sell later without generating capital gains.
The Executive has resumed the project agreed between PSOE and United We Can to limit the exemptions for the collection of dividends and capital gains that come from the subsidiaries of Spanish companies, whether national or international. Currently, those contributions are subject to a 100% exemption, which the government plans to reduce to 95%. In this way, that 5% of profits would be taxed at the 25% set by the tax.
The legal teams of the Spanish multinationals criticize the application of this tax by foreign subsidiaries, since there would be a case of double taxation, since those subsidiaries already pay the corresponding corporate tax in the countries where they operate. The Government considers that large corporations have too low a tax burden. In 2018, the effective rate on corporation tax was 6.6% for large corporations. Meanwhile, in small and medium-sized companies it exceeded 15%.
The expected collection with this small change in companies will be 473 million euros in 2021 and 1,047 million euros in 2022.
This type of companies specialized in investment and real estate management had a minimum taxation until now, as it was understood that they were pure investment vehicles, and that their owners were already taxed when collecting the dividend. However, the coalition government wants a 15% tax rate on undistributed dividends.
This tax regime typical of the Socimis, like the international figure known as REIT, has the advantage of not paying corporate tax, in exchange for distributing at least 80% of the dividends among the shareholders (who do pay tax ).
The collection capacity of this measure would be very limited because all the large Socimis distribute 100% of the accounting profit among their shareholders. The Government itself recognizes in its budget project that with this measure only 10.5 million euros will enter. For many analysts, it would be a small concession from the PSOE to Podemos, which has always denounced that the Socimis contributed to real estate speculation.