March 2025 tax newsletter

Table of Contents

March 2025

2025 has arrived with few new developments in the field of wealth taxation. Perhaps the most relevant one is the increase in the tax rate applicable to the last bracket of the savings base tax scale, which is 30% as of January 1 (previously 28%).

Although the rise of two percentage points may not seem very significant, it has gradually crept up in recent years to 30%. This contrasts with the 18% tax rate at which savings income was taxed in the original wording of the current Personal Income Tax Law. 
It should also be noted that the opposite has happened with Corporation Tax for companies that could be called small, since their tax rate has been lowered - although this rate reduction will not be immediate, but gradual over the 2025 to 2029 fiscal years.

And very importantly, we are still dealing with wealth taxation, through Wealth Tax and the Temporary Solidarity Tax on High Net Worth Individuals. Therefore, it is worth remembering the importance of containing income generation (except for capital gains over one year), in order to reduce the tax liability by applying the joint tax limit with Personal Income Tax. 

Jesús Muñoz García

Director of Asset Planning

BBVA Private Banking

Law 7/2024 includes some tax changes of interest for wealth management, which affect tax rates on Personal Income Tax and Corporation Tax.

Relevant new developments include the Autonomous Communities of Cantabria and La Rioja introducing a rebate system for Wealth Tax liability, applicable whilst the Temporary Solidarity Tax on High Net Worth Individuals is in force, so that the amount corresponding to this tax is collected by the respective autonomous community tax authorities. This regime is similar to that already established by other communities such as Madrid and Andalusia

Due to the significant uncertainty that has arisen, especially in relation to the application of the 40% reduction, below we analyze the Personal Income Tax treatment derived from collection of Pension Plan benefits due to liquidity of contributions that are more than 10 years old. We also refer to recent rulings of the Supreme Court on Wealth Tax for Life Insurance without the right to redemption.

As usual, we are dedicating this article to discussing some issues related to the application of family company tax benefits that we consider to be of special interest.
The Community of Madrid has established a deduction on personal income tax payable by taxpayers who, from abroad, establish their habitual residence in this community and invest in certain assets.
In this article, we will try to define the circumstances required for an individual to have his/her habitual residence in Spain, a vitally important aspect to determine the form of taxation for earning income, taxation for merely holding assets or the acquisition of assets and rights through inheritance or gifting.

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The content in this section is provided for information purposes only and does not comprise tax or legal advice.