Increase in special taxes and 1,000 € limit on cash payments

New developments in taxation for 2017

As from 1st January 2017 it is illegal to pay more than 1,000 euros in cash.

On 2nd December 2016 the Spanish Cabinet passed a Decree-Law which reduces the amount of cash payments to 1,000 euros (up until now the limit was 2,500€), as payment for any goods or services involving a company or a professional.

This measure came into force on 1st March 2017 in an attempt to reduce tax fraud.  You should be aware that the amounts are to be calculated for all transactions taking place during one year with the same customer or supplier.

Increase in special taxes

As regards the tax increases for 2017, the object of which is to comply with the EU deficit allowed by the EC, the Government approved the following amendments:

  • To increase the special tax applied to alcohol and tobacco. This is increased by 5%, which raises the Tax on Intermediate Products and the Tax on Spirits and Alcoholic Beverages, both on the mainland and in the Canary Islands. That increase will not however be applied to beer and wine, which are not subject to this amendment.
  • As for tobacco, tax is increased on both cigarettes and loose tobacco. The specific rate changes from 24.7% for every 1,000 cigarettes and goes up to 23.5% per kilo for loose tobacco.

Amendments to the General Tax Act, the most significant are:

  1. It is not permitted to pay any tax debt in kind if the debt is non-deferrable, for which a new sub-section 2 is introduced into article 60. Until now, it was permitted to pay some debts with Historical Heritage Assets, now these payments are restricted even more.
  2. The circumstances are tightened in which the tax debt cannot be deferred or paid in instalments, for example:
    • Withholdings, in all cases, have to be paid or they will automatically generate surcharges and interest, as they now cannot be deferred. This will lead to an amendment of article 44 of the Regulation, which has not yet happened.
    • Another example is the enforcement of tax settlements, totally or partially upheld under a final ruling, which would previously have been suspended.
    • Those arising directly from taxes that should be charged, unless it can be duly evidenced that the tax charged has not been paid, e.g. VAT.
    • Instalment payments of Corporation Tax.

In this respect it should be clarified that, unless provided otherwise, any deferrals that were requested before 1st January 2017, shall be governed by the legislation prior to that date.

Update of land registry values

Last but not least is the approval of coefficients for updating the land registry values for 2017; these will depend on the year in which the Official Table of Values was approved in each province of Spain, so that, according to the year in which that Official Table was established, one coefficient or another is applied to the municipalities included under Order HAP/1553/2016, in the following terms:

  • In the case of properties valued according to the information in the Registry for Rateable Values, the coefficient will be applied to the value assigned to those properties for 2016.
  • In the case of rateable values notified during 2016, obtained by applying the official table of partial values approved for the year in question, it will be applied to those values.
  • In the case of properties that have undergone changes according to the information in the Registry for Rateable Values, without such variations taking effect, under the new circumstances the coefficient will be applied to the value assigned to those properties by the General Directorate of the Registry for Rateable Values, applying the units that had served as the basis for setting the rateable values for other properties in the municipality.

You will find more articles on this and other aspects of Spanish legislation in the Ruiz Ballesteros Lawyers and Tax Consultants newsletter, or on the following link:

Jesús R. Ballesteros

Jesús is Economist and Lawyer. He studied “Licenciatura de Economía´´ (Bussines and Financial Degree) at the University of Navarra, and is “Máster en Tributación´´ (Master Degree in Taxation) by Garrigues (Multinational Company of Legal Services), where he started to work at their office in Granada. After this, he worked for two well-known multinational companies, while he studied “Derecho´´ (Legal Degree) in Madrid until he finally opened Ruiz Ballesteros Lawyers and Tax Advisors at the beginning of 2006. Jesús is a frequent collaborator of Radio Intereconomía at their program “Foro Fiscal´´, this program is based on tax advisement, Cadena Ser and Ondacero. He wrote a Thesis at the University of Granada which he then defended before the correspondent court, obtaining the DEA in Financial and Tax Law. The title of his Thesis: “Intercambio internacional de información tributaria y Paraísos Fiscales´´ (International tax information exchange and Tax Heavens), this makes clear that he is one of the few that have delved into this aspect of the law, and this makes it easier for him to deal with all issues related to international taxation. He is the author of the book “ Como rentabilizar tu declaración de la renta´´ (how to render your annual personal income-tax) and he is the ideologist and developer of the first legal App in Spain. Paxtum, where you can download models of all kind of legal documents. Professor of the “Instituto Superior del Derecho y Economía´´ (Institute of Law and Economics) (ISDE), in the areas of Commercial Law and Tax and Financial Law, he is co-author of their theoretical books in both areas as well as their book of “practical cases” in Financial and Tax Law. He is an expert in the Spanish taxation system, international taxation, and corporate-commercial law. He speaks English and is the Founder and Director of our company. Ruiz Ballesteros Lawyers and Tax Advisors.

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