The Treasury publishes an overview of the first five tax breaks agreed with Brussels

The Ministry of Finance released this Thursday the first of three reports given to Brussels on a recovery plan that analyzes tax breaks. The first edition of this report, which is due to expire on March 31, analyzes five tax deductions and benefits that affect, among other taxes, lotteries, corporate taxes, or professional use coal, among others.

In particular, component 28 of the recovery plan is in line with the fiscal reforms that the government has agreed to allow the European Commission access to European funds. One of the measures proposed by the executive was to review tax breaks in Spain, “to pay attention to those who distort progress and redistribution.” Promised to discuss 15 of them all in Spain, without specifying which. This analysis involved submitting an annual report on five of them during the first quarter of 2022, 2023, and 2024.

“In the first quarter of 2022, 2023 and 2024, the relevant report will be presented and the conclusions of the analysis of tax benefits analyzed in the previous year will be analyzed and, if necessary, reform decisions will be made,” the document reads. . It included, yes, the dimension: “If the economic situation allows it.”

Following the submission of this report, the document sent to Brussels promised that the necessary legal changes would be submitted within one year, ie at the beginning of 2023, after the analysis of these taxes.

The first tax exemption is for companies that register a patent, reducing the corporate tax base to encourage business innovation. However, the Treasury concludes that it is used by only more than a hundred companies across the country. To improve its use, the report proposes to integrate patent office data with the tax agency to improve its scope and examine other measures used in business R & D & i to detect possible “overlap and duplication”. This fiscal benefit to the state is 120 million.

The second tax exemption analyzed also applies to companies, specifically to nonprofits, concluding that the model used in Spain is homologous to other European countries and that the aspects where it is not more “noble” have a huge impact on revenue. The third of the advantages analyzed is the exemption from certain lottery and betting prizes and concludes that the Spanish case is peculiar in that it distinguishes between public gambling (lotteries and bets and once) and private gambling, however, it only offers implementation. An in-depth study of how these awards affect the winners ’work income.

The fourth of the benefits analyzed is the reduction of income from work abroad in the form of personal income tax, which the report supports in its “positive” effect. The last analyzed of these taxes are the exceptions and reduced rates for coal professional use, where the Treasury understands that it “does not seem necessary” to discount it when comparing it to how it is valued in other countries around us. He also believes that discounts encourage the use of the most polluting media.

42 000 million this year

Tax benefits are all initiatives such as bonuses, reductions or deductions aimed at reducing the tax impact on certain tax groups or companies for certain purposes. This policy actually takes into account the expense of the state as it is money that stops. This affects all types of taxes, such as reduced VAT rates or reduced corporate tax rates on the company’s losses in previous years. In this year’s general budget, the state encrypted 42,000 million in tax breaks.

However, organizations such as the Independent Tax Authority (IAEA) have questioned whether these benefits are justified or whether the objectives of this policy are met. The government supports this concern in a plan sent to Brussels, in which it offers a “comprehensive review of existing tax breaks to determine whether they meet the objectives for which they were approved and whether they represent their costs.” It is justified in terms of merchandising. ” In addition, he promised to limit the approval of new tax breaks if they had not previously done research on their effectiveness.

The government did not indicate any specific benefits that would be analyzed in the process, although reference was made to a report by Ayref in 2020, which is expected to be updated soon, known as Spending Overview. The document, compiled by the autonomous body, analyzes 13 tax breaks that affected all major state taxes. This list included co-taxation, contributions to private retirement plans – an event that has already been redirected -, reduced VAT rates or differentiated taxes on hydrocarbons. To this end, a working group has been set up between the Institute for Fiscal Research, the Directorate-General for Taxation and the Tax Agency. These last two institutions, Montero said, are currently focused on responding to the crisis caused by the Russian invasion of Ukraine.

Elimination of fiscal incentives is one of the fundamental points included in the document, which dealt with the Treasury obligations in the recovery plan. Along with the Committee of Experts ’conclusion, tax reform and environmental revenue expansion were some of the steps the government intends to take to achieve fiscal pressure comparable to the European one. Other measures, such as improving the fight against tax fraud, have already been introduced over the past year by a new law called Ways to Reduce Taxes.

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In an earlier version of the report, entitled “Treasury Delays Consideration of Promised Tax Benefits for Brussels to Develop Shock Plan,” the report was delayed after the deadline expired on Thursday. The report was finally published in the period agreed in the recovery plan.