On December 2nd 2016 the Spanish Government passed a number of tax and labour measures aimed at reducing the current public deficit. After introducing a minimum Corporate Income Tax payment on account for certain taxpayers last September, amendments in connection with Corporate Income Tax, Co-op tax regime, Spanish REIT, Wealth Tax (individuals), Excise Duties, General Tax Act and the Cadastral Registry have been now approved. The following is a summary of some of the more significant rules:
1. Corporate Income Tax

• Limitation of tax losses for taxpayers with turnover of at least €20 million

For tax periods starting 1 January 2016, the use of tax losses from prior years will be restricted to (i) up to 50% of the taxable base for taxpayers with turnover between €20m and €60m; and (ii) up to 25% of the taxable base for taxpayers with a turnover equal or higher than €60m. The turnover of reference will be the amount corresponding to the 12 month period prior to the current tax period.
The 70% limit will remain in force for the rest of taxpayers (60% for tax periods starting 1 January 2016).

• Limitation of tax credits to avoid double taxation for taxpayers with turnover of at least €20 million

For tax periods starting January 1st 2016, the use of tax credits to avoid double taxation, newly generated or pending from previous years, by taxpayers with a turnover of at least €20m will be restricted up to 50% of the tax liability of the period (before tax credits, rebates, withholdings and payments on account).

• Reversion of portfolio impairment provisions treated as tax deductible before 2013

Decline in value of shares is not tax deductible with effects 2013 onwards. However those remaining impairment provisions treated as tax deductible in the past shall be reverted proportionally in a 5 year period starting 2016.

• Tax disallowance of losses deriving from the disposal of shares in certain entities

With effects for tax periods starting January 1st 2017, losses deriving from the disposal of shares being eligible for the participation-exemption regime will not be treated as tax deductible. In addition, losses deriving from the alienation of shares in entities being resident either in tax havens or in low taxed jurisdictions will not be tax deductible.

2. Reduction of scope for deferral in payment of taxes

Under certain circumstances, deferral in payment of taxes may be agreed with the Tax Authorities. With effects January 1st 2017, the room for requesting and agreeing a deferral with the Tax Revenue Service will be reduced. By a way of example, this possibility will not be available anymore for debts deriving from taxes to be charged such as VAT (unless evidence is provided that taxes charged have not been paid), or for those deriving from Corporate Income Tax payments on account. In addition, payment in kind of those tax debts not eligible to deferral will not be permitted.

3. Update of cadastral values

The cadastral value is the value assigned by the Tax Authorities to real estate, which is used for the purposes of calculating certain municipal taxes such as Property Tax. Coefficients to update cadastral values with effects 2017 have been approved. The update refers to those municipalities listed in the Ministerial Decree HAP/1553/2016, dated September 29th.

Finally it must be noted that the various tax measures passed by the Spanish Cabinet shall be validated by the Spanish Parliament.