Draft Tax Reform Bill
- Sandra Parada
- Feb 13
- 2 min read
Discover the key aspects of the Draft Tax Reform Bill, including proposed changes in personal income tax (IRPF), corporate tax, expatriate taxation, and fiscal incentives for businesses and entrepreneurs. Learn how these modifications impact taxpayers and what to expect in the upcoming fiscal landscape.
June 23, 2014 – Draft Tax Reform Bill
Today, June 23, 2014, the Ministry of Finance and Public Administration submitted a report to the Council of Ministers on the Draft Tax Reform Bill. The key updates included in this report are as follows:
Personal Income Tax (IRPF)
The number of income tax brackets is reduced from seven to five.
The minimum tax rate will decrease from 24.75% to 20% in 2015 and to 19% in 2016.
The maximum tax rate will drop from 52% to 47% in 2015, and to 45% in 2016.
New social benefits are introduced for:
Families with dependent children with disabilities.
Families with dependent elderly relatives.
Large families, who will be entitled to an advance payment of €1,200 per year (€100 per month).
Savings Incentives
The new tax rates for savings income will be:
Up to €6,000: Tax rate reduced from 21% to 20% in 2015, and to 19% in 2016.
From €6,000 to €50,000: Tax rate reduced to 22% in 2015, and to 21% in 2016.
Above €50,000: Tax rate set at 24% in 2015, and 23% in 2016.
Expatriate Taxation (Beckham Law)
Several aspects of the Special Tax Regime for Expatriates (commonly known as the Beckham Law) are modified.
Non-Resident Taxation
The general tax rate is reduced from 24.75% to 24%.
The tax rate for EU income is reduced from 24.75% to 20% in 2015, and to 19% in 2016.
Corporate Tax
The general corporate tax rate will decrease from 30% to 28% in 2015, and to 25% in 2016.
SMEs will continue to benefit from the special tax regime, with a tax rate of 25%, which can be further reduced to 20.25% with new tax incentives.
Entrepreneurs
The tax reform maintains the reduced 15% tax rate for newly created companies, as established in the Entrepreneurs’ Law.
This reduced rate applies to the first €300,000 of taxable income, while the excess amount will be taxed at 20% for the first two years in which the company generates a positive taxable base.
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