Budget Law for 2021: tax measures

The Law 11/2020, dated the 30th of December, on the National Budget for 2021 was published on the 31st of December, 2020 in the BOE (Official State Gazette). For tax purposes, the most important measures are as follows: 

In the Personal Income Tax (IRPF): 

  • For the general tax bracket (mainly, income from work, real estate such as rent and returns on business and professional activities), a tax bracket is added for earnings over 300,000 euros and the tax rate goes up 2%. 
  • For the savings bracket (mainly, investment income such as interest, dividends; earnings from assets arising from the transfer of capital assets), a tax bracket is added for earnings of more than 200,000 euros, which are taxed 26%. 
  • The maximum limit of pension plan contributions is reduced from 8000 euros/year to 2000 euros /year. Nevertheless, this limit will be increased to 8000 euros/year when the contributions come from corporate contributions. 

In the Value Added Tax (VAT): 

  • The VAT on refreshments, juices and fizzy drinks with sugar or sweeteners added goes up to 21% (it was 10% before). 

In the Corporate Tax: 

  • The exemption drops from 100% to 95% for dividends and the earnings from the transfer of securities. We would like to remind you that this exemption is applicable when the percentage of shareholding is, at least, 5% and this has remained the same for at least one year. 

In the Wealth Tax: 

  • This tax is re-established indefinitely. Since the allowance was eliminated 100%, as it was done temporarily, the elimination has had to be renewed every year. 

Legal rate of interest and interest in arrears: 

  • For 2021, the legal rate of interest of money continues to be 3%, while the interest in arrears will continue to be 3.75%. 
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