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The Multi-sector Platform against Late Payments (Plataforma Multisectorial contra la Morosidad (“PMcM”)) advises that Law 15/2010, of 5 July, amending the Law 3/2004, of 29 December, on measures to combat late payment in commercial transactions (“Law 15/2010”), demands Public and private undertakings to shorten their payment terms to suppliers and informs that Directive 2011/EU of the European Parliament and Council of 16 February 2011, on combating late payment in commercial transactions (the “Directive”) could be transposed this year.

On 3 January, the PMcM issued a press release notifying that, pursuant to Law 15/2010, the term to pay suppliers in the private sector, as well as by the Public Authorities, would be reduced. From 1 January to 31 December 2012, the payment terms will be the following:

Private undertakings: 75 days after the merchandise is delivered or the services rendered.

Public authorities: 40 days as from the date of issue of the certificates or of the pertinent documents proving that the contract has been fully or partially executed.

Civil construction companies that have building contracts in force with the public authorities: Exceptionally, and during two years after the Law 15/2010 comes into force, the companies may agree to a payment term of 90 days, maximum, during 2012 with their suppliers and/or subcontractors.

Pursuant to the Law 15/2010, under no circumstances whatsoever the parties will be allowed to extend these terms by prior agreement; the purpose of this rule is to protect small suppliers from abusive practices by big companies.

Notwithstanding the above, the PMcM has informed that the enactment of the Directive may be moved forward to this year, instead of March 2013 (as foreseen in the Directive), as may be implied from the communication from the European Commission of 23 November 2011. If this were the case, the payment terms would be reduced drastically from 75 to 60 days in the private sector, and to 30 in the case of the public authorities.


The Royal Decree-Law 20/2011, of 30 December, on budget, tax and financial emergency measures to correct the fiscal deficit, published in the Official Gazette on 31 December, approved the following tax measures, among others:

The temporary application in 2012 and 2013 of a progressive complementary tax on Personal Income Tax (PIT);

The reinstatement of the deduction for investment in the main residence for all taxpayers;

The percentages for determining the withholdings of the Corporate Tax (CT) are maintained for fiscal year 2012;

The reduced tax rate in CT for microenterprises for maintaining or creating employment is extended for 2012;

The Non-resident Personal Income Tax rates are increased for 2012 and 2013 (NrPIT);

Withholding tax rates on PIT, CT and NrPIT are increased;

The reduced 4% VAT rate applicable to buying a home is extended until 31/12/2012; and finally,

The tax rate on Real Estate Tax is temporarily increased for fiscal years 2012 and 2013.

Having said this, we shall proceed to cover these tax measures to correct the fiscal deficit approved by the aforementioned Royal Decree-Law, in more detail:

I. Personal Income Tax:

The temporary application in 2012 and 2013 of a progressive complementary tax on the PIT national taxable income from 0.75 to 7% depending on the taxpayer’s general taxable base.

Likewise, the new applicable withholding rate cannot be above 52% (45% before) when adjustments are made in those years.

Withholdings on employment income corresponding to the month of January will be made without taking into consideration the new scale of withholdings resulting from the setting up of the aforementioned complementary tax.

The new scale for the calculation of withholdings on employment income will be applicable on employment income paid from the 1/02/2012, so for income paid as from that date, the employer will calculate the withholding rate taking into consideration the new scale of rates resulting from the setting up of the abovementioned complementary tax, and where applicable, will practise at that time, normalization of the withholding rate.

With relation to income from savings (interests, dividends, capital gains, etc.) for years 2012 and 2013 a temporary progressive tax of between 2 and 6% will be applied to the PIT national taxable income, depending on the amount of the taxpayer’s savings’ taxable base.

For the years 2012 and 2013 the rate will be raised from 19 to 21% on (i) the withholding percentage on income from investments; capital gains from transfers or reimbursement of stocks and shares by collective investment institutions; prizes from gambling, competitions, raffles or draws; income from leases or subleases of urban real estate; income from intellectual, industrial property, from providing after-sales service, from the lease or sublease of personal property, etc. and (ii) the percentage of the withholding corresponding to the allocation of income from the transfer of image rights.

For the years 2012 and 2013 the withholding percentage on employment income earned by company managers and members of the board of directors, etc. will be raised from 35 to 42%.

The deduction for investment in a principal residence is reinstated, effective from 1/01/2011 for all taxpayers, whatever their level of income.

The amount of 33,007.20 € is established in all cases as the total amount of income for taking into consideration the deduction for investment in a residence when calculating the withholding rate (reduction of the withholding rate on employment income by two points) to be practised on employment income to be settled or paid from 1/02/2012.

For employment income settled or paid during the month of January 2012, the withholdings will be made according to the amounts foreseen in the regulations in force on 31/12/2011.

The reduction in the net yield of economic activities for maintaining or creating employment is extended for 2012.

II. Corporate Tax:

Regarding fiscal years commencing in 2012, the tax rates which were approved by the Royal Decree-Law 9/2011, of 19 August, remain in force to determine the amount of the withholding of the Corporate Tax for years 2011, 2012 and 2013 (see our Newsletter of September 2011).

The reduced tax rate (20% on the taxable base between 0 and 300,000€ and 25% on the excess) in Corporate Tax for maintaining or creating employment applicable by microenterprises is extended to 2012. To this effect, Microenterprises are companies whose net turnover is less than 5 million Euros and the average staff is less than 25 employees in fiscal year 2012.

The withholding rate established generally is raised from 19 to 21% from 1/01/2012 to 31/12/2013.

The deduction for professional training expenses is extended for 2012, this means, expenses and investments made during this year to train employees in the use of new communication and information technologies, when it can only be done outside the workplace and after working hours. Accordingly, the percentage that can be deducted for professional training expenses will be 1%, although in the event that the expenses paid during the fiscal year are higher than the average paid in the two previous years, then 1% will be applied to the average, and 2% on the excess of the average.

Priority sponsorship activities are established for the year 2012 (such as research, development, and innovation in areas like nanotechnologies, health, genomics, proteomics and energy, carried out by entities recognized by the Ministry of Finance and Public Administrations, etc.).

III. Non-resident Personal Income Tax:

A temporary increase in the tax rate on Non-resident Personal Income Tax will be applied from the 1/01/2012 to the 31/12/2013:

The general tax rate will be raised from 24 to 24.75%.

The complementary tax applicable to income earned by permanent establishments of non-resident entities and transferred abroad, when such entities are not tax resident in another member State of the EU or in a State which has a reciprocal double taxation treaty with Spain, will be raised from 19 to 21%.

The specific tax rate established for dividends and other income arising from participations in an entity’s capital, interest and other income obtained from transferring own capital to third parties and capital gains which arise from the transfer of equity elements (real estate, etc.), will also be raised from 19 to 21%.

IV. Value Added Tax:

The reduced rate of 4% VAT on the delivery of buildings or the part suitable for use as residences, including parking lots, with a maximum of two units, and annexes situated therein transferred jointly with them, will be extended until the 31/12/2012.

V. Real Estate Tax:

An increase in the Real Estate Tax rate is established temporarily during the fiscal years 2012 and 2013 which takes into consideration the year in which the last complete property value report approved by the municipality came into force.

Therefore, for reports prior to 2002, the increase is set at 10% (and a minimum tax rate of 0.5% in 2012 and 0.6% in 2013). In the case of municipalities whose reports have been approved between 2002 and 2004 the increase is set at 6% (and the minimum rate at 0.5%) and for those approved between 2008 and 2011 the increase is 4%.

This temporary increase in the tax rate will not be applicable to (i) real estate for residential use where the property value report was approved in 2002 or in a later year, and which belongs to the half of the residential real estate in the municipality with the lower cadastral value and (ii) real estate (whether for residential use or not) in municipalities whose property value report was approved between 2005 and 2007.

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