News of the tax reform agreed by PNV and PSE in October 2017



Tax Reform

Agencies | Drafting

It is one of the novelties of the fiscal reform agreed by PNV and PSE, whose draft, criticized by Confebask, has been exposed by the Provincial Councils on their transparency portals.

The Tax Reform agreed between PNV and PSE foresees a deduction in the income tax quota of 15 percent -with an annual limit of 750 euros-, to the money contributed to investment funds aimed at promoting innovation.

This is one of the novelties of the reform, whose preliminary draft the councils have exposed today on their transparency portals, so that a period of fifteen days is opened to receive the contributions of the citizenship.

The new norm does not substantially change the current one, especially for individuals, since the tax rates for both personal income tax and companies are maintained.

Among the novelties for individuals, the aforementioned deduction for buying shares in investment funds that seek to finance innovation in companies stands out. A maximum of five thousand euros per year may be contributed, which is equivalent to deducting the aforementioned 750 euros.

The purchase will not have to be made directly, since the deduction will also be applied to the amounts that are deposited in credit institutions that finance their acquisition, that is, it can be done through the bank. They will have one condition: the maintenance of the shares or the amounts deposited for a period of five years. This measure is complemented with the exemption in the wealth tax of the shares acquired.

Tougher taxation for companies

Instead, companies will see their taxation hardened, since although the type of companies is maintained at 28 percent, limitations are established in the compensation of negative tax bases and in the application of deductions.

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The explicit objective recognized by the standard with this tightening for companies is “to contribute to the collection sufficiency of the tax system that guarantees the maintenance of the level of provision of public services”.

Another novelty in personal income tax is that there will be more deductions to encourage entrepreneurial activity and the implementation of new business projects.

Thus, taxpayers may deduct 10 percent of the amounts destined to subscribe for shares or participations in newly or recently created small and medium-sized companies, with a maximum base of 100,000 euros. This deduction rises to 20%, with a maximum base of 150,000 euros, if the new companies are innovative. Thus, limitations are established in the compensation of negative tax bases -the companies could until now compensate the losses of past years in the years that had profits, in such a way that they reduced the payment of taxes on the profits-.

Now, small companies will be able to apply the compensation regime with a limit of 80%, being 60% in the rest of the companies. On the other, the liquid quota limit for the application of the deductions is reduced from 45 to 40 percent.

Increase in deduction for job creation

Another change for companies is the increase in the deduction for job creation, which is linked to stability and salary.

On the other hand, in Gipuzkoa, the tax on wealth and large fortunes, established in 2012 by Bildu and the PSE, is now called wealth tax and is harmonized with that of the estates of Bizkaia and Álava.

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The tax rates now have the same tables as Álava and the “tax shield” eliminated five years ago is recovered. This “shield” assumes that a taxpayer will not have to pay more than 65% of his earnings per year for personal income tax and equity, which the previous rule did allow.

All these novelties, which will have to be approved at the General Meetings of the three territories, They will enter into force on January 1, 2018.

Confebask sees a taxation that penalizes business competitiveness

The Basque employer Confebask, around the preliminary draft of tax reform, has denounced that, “for the first time”, Euskadi will have business taxation “disincentive, which penalizes business competitiveness and puts the medium-term sustainability of employment at risk” with the tax reform of the Corporation Tax agreed by PNV and PSE-EE. In addition, he highlighted that a reduction of the rate from 28% to 24% would mean an induced investment of almost 600 million and the creation of 6,000 jobs.

Confebask has referred in this way to the proposal of fiscal regulations agreed by jeltzales and socialists; introduces “slight adjustments” in personal income tax and changes in corporate and wealth taxes, among which it stands out that companies will be able to deduct only 70% of the losses from previous years (now they deduct 100%).

In a statement, Confebask and its member associations, Adegi, Cebek and Sea, state that this agreement “represents a missed opportunity to position corporate taxation in favor of economic recovery and employment.”

“A reduction of the current current rate (28%) to 24% would generate an induced investment of almost 600 million euros and the creation of 6,000 jobs. We want, in turn, to remember that we still have to recover almost 40,000 lost jobs during the crisis years and that, with this agreement, it will take us longer to achieve it “, he stated.

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Type of Societies “anachronistic”

Confebask has explained that “the current type of companies is greater than that of the reference economies for the Basque Country, anachronistic due to its amount and contrary to the trend of most developed countries which, during the crisis, far from increasing it, have gradually reduced it “.

After noting that “the average rate in the EU is 22.6% and in the Euro Zone 24.4%”, he pointed out that, “since 2008, it has dropped from 26% to the current 24.4%”. For this reason, it considers that the agreement signed between the PNV and the PSE-EE is “short-term” and premiums “the collection today over the employment and investment of tomorrow”, at a time when it is “at previous levels of collection to the crisis, with which it is not justified from a supposed collection need “.

Finally, he regrets “deeply” that jeltzales and socialists “do not take advantage of the possibilities offered by the Economic Agreement to consolidate the economic recovery of the Basque Country, and consolidate it in the medium and long term “.


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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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