On the last 21st of December, Law 7/2024 of 20 December was published in the Official State Gazette (BOE), establishing certain taxes: Complementary Tax to guarantee an overall minimum level of taxation for multinational groups and large national groups; Tax on the interest margin and commissions of certain financial institutions, and a Tax on liquids for electronic cigarettes and other tobacco-related products, as well as amending other tax regulations.
This is a long-awaited regulatory text, in view of the parliamentary debate prior to its approval, and its content includes important new developments in tax matters, many of them applicable from the financial year 2024.
The following is an outline of the main modifications incorporated by this regulation, the application and interpretation of which will undoubtedly generate debate in the coming months:
1.- Amendment of Law 19/1994 of 6 July 1994 on the Economic and Fiscal Regime of the Canary Islands: Reserve for Investments in the Canary Islands (RIC).
With regard to the Economic and Fiscal Regime of the Canary Islands, we find the modification incorporated in the 4º Final Provision with regard to the materialisation of the Reserve for Investments in the Canary Islands.
Thus, it expressly incorporates the possibility of materialising the RIC in the rehabilitation of subsidised housing, in accordance with the provisions of Law 2/2003, of 30 January, on Canary Islands Housing, intended for renting in favour of persons registered in the Public Register of Applicants for Subsidised Housing of the Canary Islands, in accordance with the provisions of the Order of 24 September 2009, which regulates the system of registration, operation and structure of the said Register.
The purpose of this measure is to promote the real estate market by facilitating access to housing in the Canary Islands, although its application seems to be limited to promoters of subsidised housing, which has generated intense debate, as other operators in the real estate market whose intervention would seem to favour the ultimate purpose of this regulatory amendment would be excluded from its scope of application.
In any case, we must await any other modifications that may be made to the text of the Canary Islands REF regulations, making it possible to access these incentives for investment in free housing that is not classified as protected, as envisaged in some of the parliamentary amendments.
With regard to the REF of the Canary Islands, although efforts are being made by the different business, professional and political spheres to streamline and adapt our legislation to changes in the market and to the needs of taxpayers (businessmen and individuals), providing it with maximum legal certainty, no cross-cutting measures have been implemented which are essential for putting the incentives into practice on a day-to-day basis and for taking into account the different situations faced by taxpayers in their activities, In relation to the Canary Islands Special Zone (the star incentive of our REF), and in relation to the Reserve for Investments in the Canary Islands (RIC) in terms of the requirements established for the materialisation of the Reserve in strategic sectors of our economy, and the need to make them more flexible, in order to adapt them to cases of business crisis or sudden cessation of activity, among others.
2.- Creation of new taxes
2.1. Complementary tax applicable to large multinational groups and large national groups.
The approval of this Law complies with the obligation to transpose EU Council Directive 2022/2523 of 15 December 2022, in an international context of regulatory evolution aimed at adopting measures to reinforce the fight against aggressive tax planning in a globalised market.
This Directive finds its source in the so-called Pillar Two of the BEPS (‘Base Erosion Profit Shifting’) initiative, the aim of which is to achieve the establishment of a global minimum taxation of 15% for multinational groups.
In order to achieve this objective of a global minimum taxation of 15%, a set of Model Rules has been adopted to calculate the effective taxation and capture, where appropriate, the tax shortfall up to the 15% minimum.
2.2. The Tax on net interest income and commissions of certain financial institutions is created.
With effect for the three tax periods beginning on or after 1st of January 2024, the Tax on the interest and commission margin (IMIC) of certain financial institutions is created, a direct tax whose taxable event is the obtaining in Spanish territory of a positive interest and commission margin by financial credit institutions and establishments and by branches in Spain of foreign credit institutions.
2.3. The Tax on liquids for electronic cigarettes and other tobacco-related products is created.
With effect from 1st of January 2025, a tax is created on the manufacture, import and introduction into the internal territorial scope from the territory of other European Union (EU) Member States of liquids for electronic cigarettes, nicotine pouches and other nicotine products other than those included in the objective scope of the Tax on Tobacco Products, when they are not considered medicines.
3.- New developments in Corporate Income Tax.
3.1. The more restrictive limits for the offsetting of tax losses by large companies, based on their net turnover (‘INCN’), are re-established.
Specifically, (i) taxpayers with an INCN of less than or equal to 20 million euros will maintain the general offset limit of 70% of the positive tax base prior to the offset; while (ii) taxpayers with an INCN of more than 20 million euros and more than EUR 60 million will be able to offset BIN up to 50% or 25% (respectively) of the previous positive tax base. The possibility of offsetting an amount of up to EUR 1 million is maintained in any case.
3.2. The specific limitation on the application of deductions for double taxation, both domestic and international, is reintroduced for taxpayers with an INCN of 20 million euros or more.
3.3. The system of mandatory reversal of impairment losses on securities representing capital or equity that had been tax deductible prior to 2013 is re-established. This measure affects all taxpayers, irrespective of their INCN.
3.4. The limit on offsetting individual BIN in tax groups is extended to 2024 and 2025.
3.5. The capitalisation reserve regime is modified. With effect for tax periods beginning on or after 1st of January 2025, significant improvements are made to the capitalisation reserve regime.
3.6. New measures for micro-enterprises and small entities: Tax rates for micro-enterprises are reduced.
With effect for tax periods beginning on or after 1st of January 2025, a progressive reduction in the tax rates applicable to small companies is established, differentiating between two categories of taxpayers:
– On the one hand, for so-called ‘micro-enterprises’ (entities whose INCN is less than 1 million euros), a staggered reduction of the tax rate from the current 23% is envisaged until reaching a final rate that will be between 17% and 20%.
– On the other hand, the tax rate for small entities, i.e. entities that can apply the special regime provided for in Article 101 of the Tax Law, is gradually reduced. In this case, the current rate will be 25%, which will be progressively reduced in successive tax periods.
4.- Measures in the field of Personal Income Tax.
4.1. With effect from 1st of January 2025, the last bracket of the savings tax scale is modified from 28% to 30% (applicable to the upper margin from 300.000 euros).
This amendment also applies to taxpayers benefiting from the special scheme for workers posted to Spanish territory.
4.2. A reduction is introduced for the determination of income from artistic activities obtained on an exceptional basis.
