As 2025 kicks off, Spain has introduced a series of tax changes that could impact both individuals and businesses. The Royal Decree-Law 9/2024, which was approved in late December 2024, brings adjustments to personal income tax, corporate tax, VAT, and other levies. Here’s a clear breakdown of what’s changing and how it may affect you.
Key Changes in Personal Income Tax (IRPF)
Higher Income Threshold for Tax Returns:
Starting January 1, 2025, the threshold requiring taxpayers with multiple income sources to file a tax return has been raised from €1,500 to €2,500. Now, if your total income is €22,000 or less, and your secondary sources of income don’t exceed €2,500, you won’t need to file a return. This is great news for many part-time and freelance workers!
Green Home Tax Benefits Extended:
Spain is encouraging energy-efficient renovations by extending tax deductions for home improvements that improve energy efficiency until December 31, 2025.
Electric Vehicle Incentives Continue:
If you’re planning to buy a plug-in electric vehicle, a fuel cell car, or install a charging station, you’re in luck! The tax deduction for these purchases has been extended until the end of 2025.
Real Estate Income Adjustments:
If you own property, take note: from January 1, 2024, real estate income will be imputed at 1.1% for properties in municipalities where cadastral values have been updated since January 1, 2012.
Changes for Businesses & VAT Adjustments
Small Business Tax Estimations Stay in Place:
Self-employed professionals and small businesses using the objective estimation method (modules system) for personal income tax can continue doing so indefinitely. The simplified VAT regime and special agricultural VAT regime are also extended for 2025.
Important Deadlines:
- If you want to opt in or out of the objective estimation method for personal income tax or VAT, you have from December 25, 2024, to January 31, 2025 to do so.
- Any requests submitted between December 1-24, 2024 are also valid but can be modified until January 31, 2025.
Fuel Tax Warehouse Adjustments:
There are new regulations concerning tax warehouses for gasoline, diesel, and other fuels, aiming to refine oversight and taxation.
Corporate Tax & Other Levies
Renewable Energy Investments Get a Boost:
Businesses investing in renewable energy projects will continue to enjoy accelerated depreciation benefits throughout 2025.
New Tax on E-Cigarette Liquids Delayed:
A new tax on e-cigarette liquids and tobacco-related products was originally set to take effect in early 2025 but has now been postponed until April 1, 2025. Companies must submit their first self-assessments for April, May, and June between July 1-20, 2025.
Financial Institutions See Tax Tweaks:
Changes have been made to the tax on interest margins and commission-based revenues for certain financial institutions. These primarily affect how the tax is calculated and reported, starting from January 1, 2024.
UEFA Finals Get Special Tax Treatment:
In support of major international sports events, Spain is introducing a special tax regime for the UEFA Women’s Champions League Final 2024 and the UEFA Europa League Final 2025.
What This Means for You
Whether you’re an individual taxpayer, a freelancer, or a business owner, these changes could impact your tax situation. The higher income threshold for filing makes life easier for many workers, while extended green tax credits and electric vehicle incentives encourage sustainable choices. Businesses investing in renewable energy will benefit, and financial institutions should take note of reporting changes. Meanwhile, e-cigarette retailers have a bit more time before new taxes take effect.
As always, it’s wise to consult a tax professional to ensure you’re taking full advantage of the available benefits and meeting your obligations. Stay informed, stay prepared, and make the most of Spain’s 2025 tax landscape!
For further details, clarification, contributions or any concerns regarding this article, please feel free to reach out to us at [email protected]. We value your feedback and are committed to providing accurate and timely information. Please note that all inquiries will be handled in accordance with our privacy policy
