Chapter I: Home renovation measures
A. Special personal income tax deduction for improvements to the principal residence.
- Applies to taxpayers with a taxable base of less than 53,007.20 euros.
- For improvements made after the Royal Decree-ley’s entrance into effect and before December 31, 2012.
- Objective: energy efficiency, hygiene, health and environmental protection, renewable energy use, safety and watertightness, and specifically, the replacement of electric, water, gas or other utilities, or to improve accessibility to the building or homes under the terms of Royal Decree 2066/2008 of December 12th, regulating the National Plan for Homes and Renovation 2009-2012, as well as the installation of telecommunications infrastructures during said period that allow Internet and digital television access in the taxpayer’s principal residence.
- The deduction consists of 10% of the investment with a maximum annual deduction of 4,000 euros (a maximum of €12,000 per home for each year the deduction applies). Amounts which exceed the maximum deduction amount and which are not deducted in the fiscal year can be deducted in the four following fiscal years.
- The basis for this deduction is the amounts paid, by credit or debit card, bank transfer, check or direct deposit in credit entities, to the individuals or entities that carry out the works. Under no circumstances will amounts paid in cash qualify for the deduction.
- Under no circumstances will the amounts the taxpayer already claims for the principal residence deduction (as per Article 68.1 of Personal Income Tax Act) also qualify for this deduction.
B. Expansion of the concept of structural renovation and the application of the reduced VAT rate for all types of improvements and renovations to private homes.
- Applicable from the date of the entrance into effect of Real Decree-law of December 31, 2012.
- Includes all types of brickwork, plumbing and carpentry.
Chapter II: Measures to promote business activity
A. Extension, to 2011 and 2012, of tax free asset depreciation regime if the level of employment is maintained.
B. Simplification of the requirements to recover VAT from bad debts.
- When the amounts are owed by a public entity, the legal claim or notarized demand will be substituted by a certificate issued by the relevant office of the public entity along with a report from the auditor or treasurer.
- For business owners and professionals whose transaction volume does not exceed €6,010,121.04 during the previous calendar year, the period of one year – from the time the output tax is accrued, without receipt of payment of all or part of the debt derived from same- is reduced to six months.
- A transitional system is established for previous taxpayers who own totally or partially uncollectible receivables when the Royal Decree-law goes into effect and for whom more than six months but less than one year and three months have gone by: they can proceed with the reduction on the taxable base within the first three months following the entrance into effect.
Chapter III: Support for small and medium-sized companies (PYMES)
A. Simplification of the documentation requirements for related party transactions from small-sized entities.
- For tax periods ending after February 19, 2009.
- Small-sized companies are released from their documentation obligations for related party transactions as long as the total transactions for said period with related party individuals or entities does not exceed the total amount of 100,000 euros at market value.
- For those who exceed said limits and must comply with documentation obligations, maximum limits for penalties have been established for those cases when non-compliance with the formalities does not economically prejudice the Treasury. The penalty can never exceed 10% of the market value of the transaction or 1% of the entity’s business turnover.
- The exemption from the obligation to document does not apply, under any circumstances, to tax haven transactions, regardless of the amount involved.
Chapter IV: Measures to protect consumer
A. Increase in the amounts not subject to attachment in foreclosures.
- The new limit is set at 110% of the minimum interprofessional salary, and increases an additional 20% for each member of the nuclear family without income.
B. Establishment of a super reduced VAT rate (4%).
- Applies to telephone assistance, home assistance, by day and by nights, and residential service, as long as services are rendered in agreed markets or for public tender prices.
C. Personal income tax exemption for amounts companies pay for employee public transportation commutes.
- Valid as of January 1, 2010.
- Limit: €1,500 per year.
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