Changes in personal income tax and VAT; how do they affect us?

On 27 December, various tax changes were implemented within the Royal Decree Law 20/2022, of 27 December, which introduced a series of changes in VAT, personal income tax and other taxes, which we will explain below.

 

Deduction for maternity

With effect from 1 January 2023, the deduction for maternity of 100 euros per month will not only apply to women with children under three years of age who are entitled to the application of the minimum for descendants who are self-employed or other self-employed and registered with the Social Security or mutual society but is also extended to those who at the time of the birth of the child receive contributory or welfare benefits from the unemployment protection system, or who at that time or at any time thereafter are registered in the corresponding social security or mutual insurance scheme with a minimum period, in the latter case, of at least 30 days of contributions.

Natural gas, briquettes, pellets and firewood

With effect from 1 January 2023 and until 31 December 2023, a 5 per cent VAT rate will be applied to supplies, imports and intra-Community acquisitions of natural gas, briquettes and pellets from biomass and firewood.

 

This percentage has an applicable equivalence of 0.625% on supplies of briquettes and pellets from biomass and wood.

 

Masks, In Vitro Diagnostics and Sars Cov-2 vaccines

With effect from 1 January 2023, the following is amended:

 

This application will have effects on medical devices for in vitro diagnosis of SARS-CoV-2, vaccines against SARS-CoV-2 authorised by the European Commission and related transport, storage and distribution services.

 

Electricity

With effect from 1 July 2022 and valid until 31 December 2023, the 5 per cent VAT rate shall be applied to supplies, imports and intra-Community acquisitions of electrical energy carried out in favour of the following:

 

a. Holders of electricity supply contracts that have a contracted power that at a fixed power term is less than or equal to 10 kW. This must also be available regardless of the voltage level of the supply and the type of contract when the arithmetic average price of the daily market corresponding to the last calendar month before the last day of the billing period has exceeded 45 €/MWh.

b. Holders of electricity supply contracts who are recipients of the social electricity subscription and are recognised as severely vulnerable or vulnerable at risk of social exclusion.

 

Food

With effect from 1 January 2023 and valid until 30 June 2023:

 

1. The 5 per cent VAT rate shall be applied to supplies, imports and intra-Community acquisitions of the following products:

a. Olive and seed oils.

b. pasta products.

 

The rate of the equivalence surcharge applicable to these transactions shall be 0.625 per cent. However, the tax rate applicable will be 10 per cent as of 1 May 2023, if the year-on-year rate of underlying inflation for March, published in April, is less than 5.5 per cent. In this case, the rate of the equivalence surcharge applicable to these transactions shall be 1.4 per cent.

 

2. The 0 per cent VAT rate shall be applied to supplies, imports and intra-Community acquisitions of the following products:

The rate of the equivalence surcharge applicable to these operations shall be 0 per cent.

 

However, the applicable tax rate will be 4 per cent as of 1 May 2023, if the year-on-year rate of underlying inflation for March, published in April, is less than 5.5 per cent. In this case, the rate of the equivalence surcharge applicable to these transactions shall be 0.5 per cent.