On 31 December 2020, Spain’s State Budget Bill for Fiscal Year (FY) 2021 (the Budget Bill) was published in the Spanish Official Gazette after its prior approval by the Spanish Congress and Senate. The main corporate tax measures are summarized as follows:
- A limit of 95% of the current exemption on dividends and capital gains from shares in resident and non-resident companies in Spain, although companies with net sales of less than EUR 40 million in the previous year can still apply the 100% exemption in relation to dividends from subsidiaries established from January 1, 2021 and available for three years from the date the subsidiary was incorporated.
- The rules limiting the deduction of interest expense will be amended by removing the acquisition value condition of EUR 20 million in relation to the addition of financial income from equity instruments in determining operating profit for the purposes of the rules.
- An increase to the wealth tax and also a measure to make permanent this tax.
- An increase in the rate of value added tax (VAT) for sugary and sweetened beverages.
The measures of Law No. 11/2020 generally entered into force on 1 January 2021.
