Law 5/2021 of October 20, on Assigned Taxes of the Community of Andalusia was published in the BOE on November 3rd 2021, which seeks to improve the tax benefit among others in order to promote the social housing policy.
This was come into effect as from January 1st, 2022, with the exception of the amendments introduced in relation to the Property Conveyance Tax and Stamp Duty, which came into effect the day after the publication in the BOE, i.e. on November 4th of 2021.
Among the most significant amendments are the following:
INCOME TAX
The regional measure has been modified, so that the maximum rate (percentage) applied to the net taxable income is now 22.5%.
Additionally, a series of deductions have been made (provided that the requirements are met by the taxpayer), among which we can find:
- – Investments into a primary residence carried out by individuals under the age of 35 years old will be protected.
- – Deductions for amounts invested in the rental of a primary residence;
- – Deductions for birth, adoption of children or foster care of minors;
- – Regional deductions for international adoption of children;
- – Regional deductions for Mothers/Fathers of a single-parent families and, if applicable,with ascendants over 75 years of age;
- – Regional deductions for large families;
- – Regional deductions for educational expenses;
- – Regional deductions for taxpayers with disabilities;
- – Regional deductions for taxpayers with disabled spouses or domestic partners;
- – Regional deductions for carers of disabled persons;
- – Regional deductions for domestic help
- – Regional deductions for investments in the acquisition of shares and stock as a resultof agreements for the incorporation of companies or capital increase in certain
commercial companies;
- – Regional deductions for legal defense expenses of the employment relationship;
- – Regional deductions for donations of ecological purposes.WEALTH TAX
- – The minimum exemption for persons with disabilities is set at 1,250,000 euros (degree equal to or higher than 33% and lower than 65%) and at 1,500,000 euros (degree equal to or higher than 65%).
- – The maximum applicable rate is set at 2.5% for taxable income exceeding €10,696,000, without prejudice to the full tax rates applicable.INHERITANCE AND GIFT TAX
– The improvement of the reductions of taxable income, multiplying coefficients and bonuses of the quota established by means of equalisations:
• Registered partners or de facto unions will equate to marriages.
- Persons subject to permanent family foster care and/or guardianship for the purpose of adoption will equate to those that are adopted.
- Persons in permanent foster care and/or guardianship of a child for the purpose of adoption shall be equate to adoptive parents.
- – For ̈mortis causa ̈ acquisitions, amendments are as follows:
- An improvement in the state reduction of taxable income of the primaryresidence, so that the amount of reduction in the case of a ̈mortis causa ̈
acquisition of a primarily residence, will be 99%.
- An improvement for the acquisition of mortis causa by relatives, therefore theamount of the reduction for the ̈mortis causa ̈ inheritance and ̈mortis causa ̈ gift tax, will be as follows:
▪ Group I: acquisitions by descendants and adopted children under 21 years of age, 1.000.000€.
▪ Group II: acquisitions by descendants and adoptees of 21 years or older, spouses, ascendants and adoptive parents, 1.000.000€.
▪ Group III: acquisitions by collaterals of second and third degree, ascendants and descendants by affinity, 10.000€.
- An improvement of the state reduction of the taxable income for taxpayers with disabilities for “mortis causa” acquisitions:
- ▪ From €250,000 if the degree of disability is equal to or greater than 33% and less than 65%.
- ▪ €500,000 if the degree of disability is equal to or greater than 65%.
- An improvement in the state reduction of taxable income for the acquisition”mortis causa” of sole proprietorships or professional businesses.
- An improvement in the state reduction of taxable income for the acquisition”mortis causa” of participations in companies.
- An improvement in the state reduction of taxable income of the primaryresidence, so that the amount of reduction in the case of a ̈mortis causa ̈
- – For “inter vivos” acquisitions the reductions are as follows:
- For the ̈gift ̈ of money to descendants for the acquisition of housing: doneeswill be able to apply their own reduction of 99% of the amount of taxable income of the tax provided if a series of requirements are met.
The maximum tax bracket for the reduction will be €150,000. - For the ̈gift ̈ of a primary residence to descendants, the donees may apply their own reduction of 99% of the amount of taxable income of the tax provided that they meet a series of requirements.
The maximum tax bracket for the reduction will be €150,000. - For the ̈gift ̈ of money to relatives for the incorporation or expansion of an individual company or corporate business, provided that a series of requirements are met.
- Improvement of the state reduction of taxable income for the acquisition “inter vivos” of sole proprietorships or corporate businesses, provided that a series of requirements are met.
- Improvement of the state reduction of taxable income for the acquisition “inter vivos” of participations in corporate entities.
- For the ̈gift ̈ of money to descendants for the acquisition of housing: doneeswill be able to apply their own reduction of 99% of the amount of taxable income of the tax provided if a series of requirements are met.
- – The standard scale for inheritance and gift tax and tax liability has been modified, set at 1.0 for groups I and II; for group III it is set at 1.5 and for group IV it is set at 1.9.
- – A 99% tax credit is applicable for “mortis causa” acquisitions for groups I and II, and for “inter vivos” acquisitions. In the case of groups I and II, a 99% tax credit is applied to the tax liability, provided that a series of requirements are met in both cases.Property Conveyance Tax and Documentation of legal acts
- – It is generally stipulated that in the case of the transfer of real estate, as well as in the constitution and assignment of real rights over the same, tax liability will be determined by applying a 7% tax rate to the net taxable income.
- – In the case of leases, the tax rate of 0.3% will be applied.
- – In the case of the promotion of the social housing policy, tax rates ranging from 3.5%to 6% are to be applied to the net taxable income.
- – A reduced tax rate is set for the acquisition of housing for resale by real estateprofessionals. In the case of property transfers and documented legal acts, a 2% tax rate will be applied to the acquisition of housing by an individual or legal entity that carries out a business activity to which the rules for the adaptation of the General Accounting Plan for the Real Estate Sector are applicable, provided that a series of requirements are met.
- – A reduced tax rate is set for certain transactions involving reciprocal guarantee companies or state or Andalusian public sector companies whose purpose is to provide guarantees for the financing of activities for the creation, conservation or improvement of forestry, agricultural, livestock or fishing wealth of the Autonomous Community of Andalusia, in a series of transactions.
- – A reduced tax rate of 1% is introduced for the acquisition of certain vehicles operated in an efficient and sustainable manner for certain movable assets.
- – A tax rate of 8% will be applied to the transfers of passenger cars and off-road vehicles exceeding 15 horsepower, as well as recreational boats with a length of more than 8 meters, along with art objects and antiques.
- – Tax benefits will be available in the adjudication of a primary residence in payment of a total outstanding debt of a loan or credit secured by mortgage, provided that a lease contract with a purchase option on the same property is formalised.
- 100% tax rebate of the quota in respect of Onerous Patrimonial Transfers, in the constitution of the purchase option.
- 100% tax rebate on tax liability for the concept of the transfer of property for valuable consideration in the case that the purchase option is exercised.
- – The general tax rate for notarised documents is set at 1.2%.
- – A reduced tax rate is set to promote the social housing policy by applying a ratebetween 0.1% and 1% depending on the transaction and subject to compliance with certain requirements.
If more information is needed, do not hesitate to contact us. We will be pleased to help.
GRUPO CONTASULT