The Senate has approved the amendments presented by the parliamentary groups to the Tax Reform.


Property Law and Tax Issues

The Spanish Government wishes that the parliamentary proceeding to the Tax Reform is not delayed any longer in order that the promised “tax reduction” be effective on the 1st January 2015.

For this countdown last 14th of November the Senate approved the amendments presented by the parliamentary groups to the three projects of law forming the Tax Reform, that is, that of Income Tax, VAT and Company Tax. But without any doubt the most important modification is the one presented to reduce the tax blow established in one of the texts concerning the capital gains on the sale of properties. Initially the text eliminates the rates of correction and reduction in the capital gains through the sale of properties purchased prior to 1994 but that now, and thanks to the approval of the Upper Chamber of this and other important rectifications of the Tax Reform, these will be as follows:
Personal Income Tax (IRPF)
  • Rates of Reduction.
Finally has been approved that the rates of reduction be maintained for profits obtained in the sale of properties or other assets for a selling price up to 400.000 €.The application of the rates, that implicate a tax reduction, will be effective only for the sale of properties purchased before the 31st December 1994 and up to the 20th January 2006.
This limit amount of 400.000€ will only be applied to the combined sale of assets even though the sale of each property takes place in different periods of time.
  • A tax payer sells for the amount of 250.000 € a property purchased in 1993. The reduction rate will be applied on the selling value and 150.000€ will still be available for the sale of another property or asset, although the operations of sale of the properties be carried out in different periods of time.
  • In the case of a tax payer selling for 600.000 € an abode purchased in 1993, the reduction rate will be applied on the first 400.000 € and no amount will be available for the sale of another property or asset.
Therefore, with the application of this rule and from the point of view of a tax profit for the tax payer, our department of tax consultancy advises to sell first the oldest properties, possessions or assets. 1The amendments to the Tax Reform approved by the Senate
 Payment of the NON RESIDENTS
As already mentioned in our blog concerning the Sentence of the European Union Court of Justice on the 3rd September, in which the Spanish Inheritance and Donation Tax is considered as discriminatory for non residents, with the approved amendments the regulation of the tax will adapt to the sentence of the European Union Court of Justice in the following cases:
  • - In the case of acquisition of assets and rights through inheritance and when the deceased has been Resident in an Autonomous Region, the Non Resident tax payers, resident in a member State of the EU or the Economic European Area, may take advantage of the autonomous tax advantages by right as they will be applied the regulation corresponding to the Autonomous Region and not the National State, of the deceased.
  • - The same will occur in the acquisition of properties located in Spain through donation without charge and “living” as the non resident tax payers will also have the right to pay tax following the regulation of the Autonomous Region, where the mentioned assets are situated.
Now that the amendments have been approved by the High Chamber, the Tax Reform will return to the Congress who should endorse the changes of the Senate before its entry into force planned for the 1st January 2015.

More information about the Tax Reform:


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