March 2023 Tax Newsletter

It has already been three months since we waved goodbye to 2022. With regards to HNW taxation, we will all remember it as a year when the vast majority of family SICAVs disappeared, and when we saw the introduction of a new tax known as the Solidarity Tax on High Net Worth Individuals.

In 2022, dissolution agreements were adopted with liquidation of all SICAVs whose stockholders or partners decided to take advantage of the transitional arrangement so that, due to changes in their taxation, they could "leave" this investment vehicle with no tax implications. Although the deadline for reinvesting in Spanish funds is not until July 31, a large portion of these reinvestments have already taken place.

On the other hand, as indicated above, a new tax was established that few of us probably expected but which, despite significant doubts about its constitutionality, was published in the Official State Gazette on December 28. The aim, as expressly indicated in its own legislation, is to harmonize wealth taxation across all autonomous communities.

2023 begins with a focus on the Solidarity Tax on High Net Worth Individuals (ISGF), since it is the first year in which a tax return will need to be filed on existing wealth in 2022. It is also important to bear in mind that the tax return will have to be filed in July, once the payment made for Wealth Tax (IP) is known, as it is deductible when determining the amount payable for ISGF.

Apart from this new tax, there is a change in the tax scale applicable to the Personal Income Tax savings base, which has led to a small increase in the rates at which the highest incomes are taxed and, at autonomous community level, specific changes to IP.

Specifically, with regard to wealth tax (IP) and autonomous communities, Andalusia has joined Madrid as a community in which the tax is fully exempt, there is an increase from 25% to 50% in the applicable relief on the payment in Galicia, a rise in the exempt minimum to 3,700,000 euros in Murcia, as well as a temporary increase in tax rates in Catalonia and Valencia.

Jesús Muñoz García

Director of Asset Planning

BBVA Private Banking

On December 28, Act 38/2022 of December 27 was published in the Official State Gazette (BOE). It sets out temporary levies on energy companies, credit institutions and financial credit institutions, establishes the temporary solidarity tax for high net worth individuals, and modifies other tax rules.

Act 31/2022, the General State Budgets Act for 2023 published in the Official State Gazette (BOE) on December 24, incorporates new tax measures with repercussions on wealth management. We comment on the most interesting measures below.

On December 22, Act 28/2022 of December 21 was published in the Official State Gazette (BOE) to support start-ups, better known as the "Start-Ups" Act. This act encompasses a set of tax incentives aimed mainly at promoting the specific needs of this type of company, including a further tax amendment.

Below, we summarize the tax measures introduced through this act that might be particularly interesting:

Like every year, autonomous communities are incorporating changes in the area of assigned taxes. This includes a reduction in autonomous rates applicable to the general base for Personal Income Tax, as well as those relating to Wealth Tax.

The Supreme Court recently issued rulings on two interesting issues that change the criteria the Court had previously maintained. Specifically, they deal with the taxation of the granting of purchase options, and late payment interest derived from the refund of undue income.

As we will see below, investment in Venture Capital could qualify to apply family business tax benefits, although it will depend on compliance with certain requirements, including the way in which the investment is instructed: