The Spanish lower house of parliament (Congress of Deputies) approved a new fiscal package that includes a three-year extension of the windfall tax on banks on 21 November 2024.

The tax, previously set at a flat rate of 4.8%, will now follow a progressive structure based on net interest and commission income. The rates will range from 1% for earnings up to EUR 750 million, rising to 3.5% for EUR 750 million to 1.5 billion, 4.8% for EUR 1.5 billion to 3 billion, 6% for EUR 3 billion to 5 billion and 7% for banks with earnings over EUR 5 billion.

Additionally, the Congress reintroduced restrictions on tax losses that had been ruled unconstitutional earlier in 2024 by Spain’s Constitutional Court. Under the new provisions, companies with a net turnover between EUR 20 million and EUR 60 million will be limited to offsetting 50% of their carried-forward losses, while larger companies (with net turnover in excess of EUR 60 million) will only be able to offset 25%. The changes also limit the use of double taxation credits and require the reversal of certain past impairment loss deductions.

Finally, the new measures extend the loss offset restriction to apply to tax groups for the years 2024 and 2025, limiting the offset of losses within the group to 50% while carrying forward unclaimed losses for up to 10 years.

Earlier, the Spanish government issued the “Law 38/2022” which introduced the windfall profit taxes on the energy and banking sectors on 27 December 2022. Under this, large energy companies were charged at the rate of 1.2% of net turnover derived from activity in Spain and Banks companies were levied at the rate of 4.8% of net interest and commission fee income.

The 1.2% tax applied to persons or entities deemed to be “main Operators” in the energy sector, as defined in relevant laws and regulations. However, operators whose turnover for the financial year (FY) 2019 was less than EUR 1 billion or whose turnover for FY 2017, 2018 and 2019 related to activities in the energy sector did not exceed 50% of the total turnover of the relevant FY would not be taken into account under the rules.

The 4.8% tax applied to banks which operated in Spain and had an amount of net interest and commissions for the year 2019 equal to or exceeding Euro 800m. Both windfall levies came into force temporarily for 2023 and 2024.