At the end of 2022, the General State Budget Law 2023 was published, which is characterized by including the largest social spending in history. This Law reaches 24,224 million euros, including European funds, and aims to mitigate the impact of inflation generated by the war in Ukraine. Did you not know about this new law? Then you’ve come to the right place to find out everything about it, join us!
What is the General State Budget Law 2023 about?
The General State Budget Law 2023 is a law created with the purpose of counteracting the high inflation generated by the war in Ukraine, which directly affects the most vulnerable groups.
Want to know what the key points are? Check them out below!
- Title I: where all the statements of income and expenses of the state public sector are approved; and the amount of tax benefits affecting state taxes is allocated.
- Title II: structured in three chapters:
- The first chapter regulates the management of teachers’ budgets.
- In the second one, the competences regarding budget modifications in the area of the National Institute of Health Management and the Institute for the Elderly and Social Services are included.
- The third establishes the percentage of participation of the AEAT in the gross revenues obtained in 2023, derived from its own activity.
- Title III: this includes personal expenses, which are expected to grow by 3.5% with respect to the previous year. As well as the replacement rate, which will be 120% in the priority sectors and 110% in the other sectors when it comes to job offers.
- Title IV: this covers the subject of public pensions and establishes the procedure for their determination. It is expected to experience a percentage increase equal to the average value of the year-on-year variation rates.
- Title V: deals with financial operations and, likewise, is structured in three chapters dealing respectively with public debt, public guarantees and other guarantees and, finally, with the relations of the State with the Instituto de Crédito Oficial (Official Credit Institute).
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Some of the changes that the tax field will undergo as a result of this new legislation are as follows
At the fiscal level, the General State Budget Law 2023 will generate several changes that you should take into account if you plan to start a business in 2023. Some of these tax changes, and which are raised in Title VI, are:
Changes in Personal Income Tax
For workers and pensioners, the amount of the reduction for obtaining earned income and the threshold from which the reduction is applicable will be increased. This means that the amount of the gross annual salary from which the IRPF starts to be paid will be increased. Going from 14,000 euros per year to 15,000 euros per year.
The increase in the reduction was extended to taxpayers with a minimum salary of 21,000 euros per year. Also, the lower threshold for the declaration obligation of those receiving earned income was raised to 15,000 euros per year.
In addition, there was an increase in the reduction applicable to economically dependent self-employed workers. For the rest of the self-employed who determine their net income under the simplified direct estimation method, the reduction rises to 7% of deductible expenses in concepts of provisions.
For self-employed persons who determine the net income of their activity according to the objective estimation method, the increase is 10% in the general reduction applicable on net income.
Changes in corporate income tax
The General State Budget Law 2023 proposes to reduce the tax burden of small companies. Therefore, a 2% tax reduction was applied to those entities with a turnover of less than one million euros in the 2022 tax period.
VAT modifications
With the General State Budget Law, the limits for the application of the simplified regime and the special regime on the added value of agriculture, livestock and fishing are extended. This is a way in which it is possible to improve the conditions of these trades.
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Variations that the Local Entities and Autonomous Communities will have.
Title VII of the General State Budget Law 2023 is divided into two chapters aimed at explaining the variations that will be experienced by Local Entities and Autonomous Communities, respectively:
Throughout Chapter I
The rules relating to the financing of Local Entities are presented, including in this section the municipalities, provinces, island councils and councils, as well as the uni-provincial Autonomous Communities.
It also includes the regulation of the special participation regimes of communities such as Ceuta and Melilla, both belonging to the Canary Islands. It also covers the local entities of the Historical Territories of the Basque Country and Navarre.
However, this new regulation is complemented by other transfers, consisting of compensation to municipalities for tax benefits granted to individuals and legal entities in local taxes.
Regarding Chapter II
Certain characteristics of the financing of the Autonomous Communities of common regime and of the Cities with Statute of Autonomy will be regulated. The financing system in force for 2023 assigns financial resources to cover the global financing needs of each Autonomous Community.
These funds consist of the Global Sufficiency Fund, the Transfer of the Fund for the Guarantee of Fundamental Public Services and the Tax Capacity.
Updating of Social Security Contributions
Developed in Title VIII and contains the new and updated regulations related to the contribution bases and rates of the different Social Security regimes.
This section of the General State Budget Law 2023 consists of three chapters dedicated especially to: “Bases and rates of contribution to Social Security, Unemployment, Severance Protection, Wage Guarantee Fund and Vocational Training during the year 2023”, “Contribution to the General Mutual Benefit Societies of Civil Servants for the year 2023” and “Contribution to passive rights”.
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Do you want to start your business idea in Spain? Well, you need to be aware of the new General State Budget Law 2023 and, for that, TAS Consultancy can be your best ally. Contact us through tasconsultoria@tas-sl.es where we offer you the most complete service in consultancy, in the hands of great professionals. Do not miss this opportunity and schedule your free consultancy to ensure the success of your company!
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