Tax developments in the Valencian Community 2021

The Law 3/2020, dated the 30th of December, on tax measures, administration and financial management and the organization of the Generalitat (Valencian Autonomous Government) 2021 has been published in the Official Gazette of the Valencian Autonomous Government. The main tax measures that have been approved are as follows:

  • Wealth Tax.-
  • The minimum exemption is reduced from 600,000 euros to 500,000 euros. Therefore the tax base of the Wealth Tax for tax payers that are tax residents in the Valencian Community will be reduced to 500,000 euros, as the minimum exemption.
  • The tax rate of the last tax bracket is increased (for net tax bases over 10,695,996.06 euros), from 3.12% to 3.5%.
  • Both modifications will come into force in 2021 (to be included in tax returns filed in May-June, 2022).
  • Personal Income Tax (IRPF).-
  • The autonomous community deduction for renting the main residence is increased; it can be as much as 850 euros.
    • There are a series of requirements that have to be met to apply this deduction, which include, being aged 35 or younger and the sum of the general and savings tax base of the tax payer cannot be any more than 25,000 euros in the individual tax return system or 40,000 euros in the joint tax return system.
  • A new deduction is created for buying shares or stocks.
    • 30% deduction on the amounts invested, with a limit of 6000 euros, as a result of incorporation or capital increase.
    • Main requirements:
      • It must not be an activity that has been carried out previously under another ownership.
      • The transaction must be formalized in a public document.
      • The stocks and shares must be kept for at least 3 years.
      • The company that is invested in:
        • Must have its registered office and tax residence in the Valencian Community and keep it for 3 years after the incorporation or capital increase.
        • It must carry out an economic activity. The management of assets or property cannot be its main activity.
        • It must have at least one person with a full time employment contract (general social security system) for 3 years.
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