The changes in the IRPF collected by the Government in its 2019 Budgets have as large injured the highest incomes, both those who charge more for their income from work and those who earn more capital gains from their investments. Large fortunes are also penalized with an increase in wealth tax.
The news, which still have to overcome a difficult Parliamentary obstacle to become a reality, come a month and a half after the end of the fiscal year, so that if already these dates are the usual time to dust off the formulas with which to try lower the final bill with the Treasury, on this occasion, the changes that could take effect in 2019 make fiscal planning even more necessary.
Those affected by the rise in personal income tax provided by the Government have reacted – in addition to the predictable refusal to raise taxes – with skepticism and caution, according to private banking and wealth management entities.
Not in vain, the Government still does not have the parliamentary support to move forward in Congress the Budgets that include the increase of income tax to the highest income and with which it plans to enter 328 million in 2019 and 332 million in 2020. After the budgetary agreement with Podemos, the position of the Catalan parties is now key. Not only because of the turbulent sea of political background -regarding the independence movement and the imprisoned politicians, an omnipresent issue in the relationship with Madrid-, but also due to the fact that the rise in the marginal rate for the highest incomes will be especially burdensome in Catalonia, where higher rates than the state are already applied in the autonomy section of the income tax declaration.
But given the possibility that the IRPF may be higher, tax advisors advise to do accounts and in case of having very clear the sale of a good or the collection of a pension plan, heal in health and advance this year to pay less taxes.
The threshold of 130,000 euros
Budgets establish an increase in two points on the general basis for taxpayers' income exceeding 130,000 euros, which goes from the current 45% from 60,000 euros to 47%. And an increase of four points for rents over 300,000 euros, which will therefore be taxed at 49%. This increase means that for taxpayers with incomes above 130,000 and 300,000 euros, the marginal of the state tranche would rise from 22.5% to 24.5% and 26.5%, respectively.
The other half of the tax corresponds to the autonomic stretch and in this terrain, the autonomous communities have jurisdiction to establish a different one from the state one. Thus, it turns out that in regions where the maximum rate is already higher – Catalonia, Andalusia, Asturias and Comunidad Valenciana have a maximum of 48% -, income of more than 300,000 will be taxed at 52%. For the income segment between 60,000 and 130,000 euros, taxation remains at 45%.
The effect of this increase will obviously be noted in the payrolls of greater amount and also in the rescues of pension plans of greater amount, in which the benefit is taxed at the marginal rate of the taxpayer. In the rescue of the plan, the advice is usually to wait for the collection of the public pension, so that the reduction of income with respect to the salary reduces the marginal rate of the taxpayer. "But for those who have partially retired and are still working or who receive, for example, rent rents that raise their level of income, it might be convenient to rescue them earlier than planned," explains Marta Nimo, director of the fiscal area of atlCapital. "When in doubt, it may be preferable to advance decisions," adds Belén Alarcón, director of property planning at Abante.
More capital gains tax
Along with the increase in the highest part of the general income tax base, the Government also intends to penalize the higher capital gains on the savings base. A) Yes, Capital gains or capital returns exceeding 140,000 euros will be taxed at 27%, instead of 23% current. For lower profits, taxation will remain unchanged: a tax of 19% on the first 6,000 euros earned, 21% to the next 50,000 and 23% from 50,000 to the new threshold of 140,000 euros.
In short, if the changes finally come into force in 2019, it may be convenient to materialize this year the surplus value to pay less. Marcelino Blanco, director of property planning at Andbank, advised to advance taxation in 2018, especially in the case of purchases with a deferred price, those in which it is expected to obtain the income after some time. It would also be advisable to advance the collection in deferred compensation, those that are accrued over time. In this case, they would be income from work, but they would also be taxed at 47% or 49% instead of 45% when they exceed 130,000 euros.
When deciding when to sell an asset, an increase in taxation can be decisive, especially if it is a property or an investment portfolio that will generate a high surplus value. "If the asset is not going to revalue, it may not be worth selling it now or in January"says Marcelino Blanco.
"Everything that is sold before the end of the year will pay less. If you are thinking about selling, it may be the time, but only if it is clear, "adds Rubén Gimeno, director of the study service of the REAF of the General Council of Economists.
The handicaps are another formula with which to reduce the fiscal bill of the patrimonial gains. The losses suffered in the current year -and those that have not been compensated in the three previous years- serve to reduce the amount of the gain subject to taxation. In this sense, another resource may be to raise handicaps this year in the idea that they serve to reduce taxes for future years, according to Marta Nimo. "The important thing in any case is to optimize fiscally the current year, be vigilant before the changes that may come but not make hasty decisions", adds the expert.
Another of the fiscal novelties that concerns the highest rents, in this case millionaires, is the increase included in the Budgets of the tax on the patrimony. Up 1% for fortunes of more than 10 million euros. Currently, the tax for this section of assets is 2.5%. This tax is statewide but is assigned to the Autonomous Communities, which in many cases have deductions and bonuses that significantly reduce it.
In Madrid the increase of this tax will not have any effect since this autonomy benefits 100% this taxor, so that no taxpayer pays it. And in La Rioja the bonus is 75%. There is also a minimum exemption of 700,000 euros of assets, from which the habitual residence is excluded, which is reduced in some autonomies. For those who exceed this threshold without reaching 10 million there would be no changes.
Another factor to keep in mind is that the ownership of a company is also usually exempt from the estate tax. It is enough to comply with a series of requirements, such as the percentage of participation in the social capital is greater than 5% at the individual level or at 20% at the family group level, that the remuneration received from the family business must be the main source of income of some of the members of the family – surpassing 50% of the income from work – and that the entity must develop an economic activity. It can not therefore be a mere patrimonial company. In 2016, according to the latest data from the Tax Agency, the collection for the property tax was 1,039 million euros. With the increase announced, the Government plans to raise 339 million in 2019.
Apart from the penalty for higher incomes, the Budgets include other fiscal changes that will impact on the pockets of citizens. The Government will increase the taxation of hydrocarbons according to their emissions, which consists of a rise of 38 euros per thousand liters in the case of gas oils. The objective is to progressively equate the taxation of diesel and gasoline, without affecting transporters and farmers, according to the Executive. For a consumer who makes about 15,000 kilometers per year with a vehicle with an average age, the increase in diesel tax will cost 3.3 euros per month, according to the calculations made by the Minister of Finance María Jesús Montero.
Specific discounts in the VAT
Another of the most direct fiscal changes in the pockets of taxpayers will be the reduction of VAT for feminine hygiene products, which goes from 10% to 4%. The VAT for veterinary services is also reduced to the reduced rate of 10%.
Change of control over the sicav
Government Budgets have ignored the changes in the taxation of the SICAV, an investment vehicle own of large assets but also accessible to the small investor and that does not pay for the profits obtained, only at the moment in which the capital gains materialize from the investment. Yes, a modification is introduced on the control of these vehicles, which returns to the Tax Agency instead of the CNMV, the current supervisor. At the moment there has been no hardening in the taxation of the SICAV but it is a known aspiration of the political forces the elimination, or at least the restriction, of their fiscal advantage. In the sector in fact await changes that equate the lien on the sicav to corporation tax.