The Government has announced a packet of tax cuts which aims to alleviate the domestic budget of the most vulnerable consumers with low incomes and the self-employed.
These tax cuts will be compensated by a new tax on the “grand fortunes” of Spain and rises in tax on high incomes.
VAT on feminine hygiene products (such as Tampax, sanitary towels etc) will also be cut from 10% to 4%.
The lower rate of IRPF tax (income tax), previously applied to income of 18,000 euros annually will now be applied to incomes of 21,000 euros annually.
This reduction will benefit 50% of the workers in Spain and those earning 15,000 euros annually or less will not pay any income tax.
The self-employed will also benefit from a 5% reduction of income tax on their net profits.
The “grand fortunes” of three million euros or more will pay a “patrimony solidarity tax” of 1.7% and rising according to the amount of the fortune.
Income tax on those earning 200,000 to 300,00 euros annually will rise to 27% and gradual rise as incomes rise.
While the contribution of big business will increase to a minimum of 15% the contribution of the small and medium businesses will be cut by 23 to 25%.
These measures have been declared as temporary and will come into effect from January 2023.
