The Budget Law for 2018 has been published and various orders have been amended to adapt them to the law

The General Budget Law for 2018 (Law 6/2018 of July 3, 2018) was published in the Official State Gazette -July 4, 2018 issue-.

For further details see our Tax Commentary 6/2018, available at http://www.garrigues.com/en_GB/new/general-budget-law-2018-introduces-important-tax-measures.

Later, the Official State Gazette -July 18, 2018 issue- published Order HAC/763/2018 of July 10, 2018 (entering into force on July 19, 2018), amending the orders that approved:

  1. Form 143 for requesting early payment of the personal income tax credits for large families and dependants with disabilities (Order HAP/2486/2014, of December 29, 2014).
  2. Form 122 “Personal income tax. Tax credits for large families, for dependants with disabilities or for each ascendant with two children, who is legally separated or has no marital ties. Adjustment related to the right to the tax credit for taxpayers not obliged to file a return” (Order HFP/105/2017, of February 6, 2017).
  3. Form 136. “Personal income tax, corporate income tax and nonresident income tax. Special tax on certain lottery and betting winnings. Order HAP/70/2013, of May 30, 2016. Self-assessment” (Order HAP/70/2013, of January 30, 2013).

These amendments were made to adapt the foregoing forms (i) to the increases in the tax credits for large families and dependants with disabilities, and (ii) to the higher exemption threshold for the special tax on certain lottery and betting winnings, introduced in the Budget Law.

In relation to the increase in the tax credit for each additional child in a large family, it is provided that taxpayers who applied for early payment of the tax credit for large families before the entry into force of the Order will not have to apply for early payment of the increase in the tax credit because this will be done automatically by the tax authorities.

The Order will be applicable to applications for early payment of tax credits for large families and dependants with disabilities that are filed on or after August 1, 2018; and for self-assessments of the special tax on certain lottery and betting winnings in the first quarter of 2018 and thereafter.

Lastly, Order HAC/748/2018 of July 4, 2018 (published in the Official State Gazette on July 14) amended article 2 and the annex to Order HAP/2652/2012, of December 5, 2012, which approved the refund tables applicable by institutions authorized to participate as approved institutions in the VAT refund procedure for travelers. This amendment arises also from the recent Budget Law, which has removed the minimum total invoice amount that used to be required to be able to claim a refund of the input VAT paid on purchases made by travelers.

Publication of the annual equivalent rate for the third calendar quarter of 2018, for the purpose of characterizing certain financial assets for tax purposes

The Official State Gazette -June 29, 2018 issue- published the Decision of June 27, 2018, by the Secretary General for the Treasury and Financial Policy which, as has become customary practice, provides the applicable reference rates to calculate the annual equivalent rate to characterize certain financial assets for tax purposes, this time for the third calendar quarter of 2018. The rates are as follows:

  • Financial assets with terms of four years or less: -0.030 percent.
  • Assets with terms between four and seven years: 0.269 percent.
  • Assets with ten-year terms: 1.125 percent.
  • Assets with fifteen-year terms: 1.464 percent.
  • Assets with thirty-year terms: 1.780 percent.

In all other cases, the reference rate for the period closest to the period when the issuance is made will be applicable.