Preliminary Bill on Support for Entrepreneurs III – New developments in the tax area
After taking a look at the new features set to be introduced by the Preliminary Bill on Support for Entrepreneurs and their Internationalization from the corporate/commercial and labor and employment law standpoints, today we complete our news roundup by focusing on its tax aspects.
From this standpoint, the following new features can be highlighted:
– In the corporate income tax area, the tax credit for R&D activities is set to be significantly improved by removing to a degree the limit on the amount of gross tax payable against which it can be taken (subject to a 20% discount on its amount) and by allowing qualifying taxpayers to even apply to the tax authorities for payment of the tax credit. However, this will come with the need to meet certain requirements linked, basically, to maintaining jobs and using an amount equivalent to the tax credit taken or obtained for the same activity.
The tax relief known as the “patent box” is also set to change substantially. First of all, the change will affect the reduction in the calculation base, restricting relief to the income/gains obtained and not to revenues as was hitherto the case (the new calculation will be based on the positive difference between revenues and certain expenses directly related to the licensed intangible). 40% of the amount of the income/gains will be included in the entity’s tax base, and it will be possible to apply the patent box (subject to certain requirements and limits) in cases where the licensor has not created the licensed assets. A second noteworthy consequence of this proposed change is that the quantitative limits on the amount of the incentive (currently six times its development cost) will disappear, as will the possibility of applying to the tax authorities for a prior agreement on characterization of the assets and the possibility of valuing the income/gains generated.
Lastly, other incentives will be established for enterprises of a reduced size, such as taxation at an effective rate of 15% in the case of income allocated to certain investments.
– In the personal income tax area, the Preliminary Bill establishes a new tax credit for investments in new or recently created enterprises and an exemption for the gain derived from the subsequent divestment, provided that the proceeds are reinvested in another entity of the same type.
– In the VAT area, a new special scheme is introduced whereby, subject to certain requirements, enterprises with a turnover not exceeding €2 million can elect to apply the cash-basis accounting method. Under this scheme, the accrual of output VAT will be delayed until the enterprises are paid by their customers, although their right to deduct input VAT will also be delayed as well.
As has been shown in this series of posts, the new Preliminary Bill on Support for Entrepreneurs introduces improvements in the different areas that are involved in the creation and start-up of new ventures, and may contribute to stimulating entrepreneurial and business activity in Spain.
Garrigues Tax Department