Newsletter #9

|30/10/2024| 

Dear Clients and Friends, 

We are delighted to welcome you to another edition of our newsletter, at a time when the State Budget proposal for 2025 is in the stages of approval, analysis, and discussion. This is an important moment for planning the upcoming fiscal year, and, as always, we are closely monitoring the tax changes that could impact your business and daily operations. 

As usual, we provide a set of relevant topics, with detailed documentation available in the attachments below. 

Please do not hesitate to contact us if you require further clarification. 

With our best regards, 

#1 - Treatment of Rental Deposit

Binding Information from the Tax Authority, Process No. 25417 

The binding information details that amounts received as deposits in rental agreements are considered real estate income and, therefore, subject to IRS. For companies, this deposit is considered income subject to withholding tax at a rate of 25%.  

#2 - VAT - Treatment of Vouchers 

Circular Letter No. 30208 

Circular Letter No. 30208 covers the new VAT rules applicable to vouchers, as introduced by Directive (EU) 2016/1065 and transposed by the 2019 State Budget Law. It defines "single-purpose voucher" (SPV) and "multi-purpose voucher" (MPV), clarifying the tax liability and taxable amount in each case. For SPVs, VAT is due upon issuance; for MPVs, it is due upon the purchase of goods or services. These changes apply to vouchers issued from January 1, 2019.  

#3 - Key Corporate Income Tax (IRC) Measures in the 2025 State Budget Proposal 

Analysis by the OCC of the 2025 State Budget Proposal 

The main IRC measures and corporate benefits in the 2025 State Budget proposal include: 

• Corporate Income Tax Rate Reduction: The general IRC rate decreases from 21% to 20%. For small and medium-sized enterprises (SMEs) and "Small Mid Cap" companies, the rate applicable to the first €50,000 of taxable income drops from 17% to 16%.
• Increased Deductibility of Health Insurance Expenses: Health insurance expenses for employees become deductible at 120% for taxable income calculation.
• Salary Increase Incentive: Eligible expenses for tax deductions increase from 150% to 200% for companies that raise the average annual salary by at least 4.7% for employees with permanent contracts.
• Capitalization Incentives: The deduction benefit of 20% for capital inflows is extended to all companies, with no specific financial conditions.
• Autonomous Taxation for Vehicles: Reduction in autonomous taxation rates for vehicles and increase in cost limits subject to these rates, for example, raising the exemption limit from €27,500 to €37,500.

These measures aim to reduce tax burdens and encourage investment, capitalization, and wage increases in companies. However, they are still pending approval.