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Tax Updates in 2025 in Spain

Tax Updates in 2025 in Spain Publicado: 23-01-2025

With the arrival of 2025 and the new fiscal year, certain tax modifications have been introduced under Royal Decree-Law 9/2024, dated December 23. This decree adopts urgent measures in economic, tax, transportation, and Social Security matters, as well as extending specific measures to address situations of social vulnerability.

These updates are characterized by extended deadlines for deducting certain expenses and increased amounts for some deductions. The main taxes affected include the Personal Income Tax (hereinafter, IRPF), the Value Added Tax (hereinafter, VAT), and the Corporate Tax (hereinafter, IS), among others.

Personal Income Tax

Effective from January 1, 2025, several amendments to Law 35/2006, dated November 28, on IRPF, have been introduced:

  1. Increase in the exemption threshold for mandatory filing based on income from second and additional payers: The exemption threshold will now be €15,786 for employment income from more than one payer. However, the threshold remains €22,000 annually if the total income from second and additional payers does not exceed €2,500 annually. Previously, this limit was €1,500, an increase of €1,000 (amendment to Article 96.3 of the Personal Income Tax Law, hereinafter LIRPF).
  2. Extension of the deadline to apply the 20% deduction for energy efficiency improvement works on residential properties: This applies specifically to works aimed at reducing heating and cooling demands and improving the consumption of non-renewable primary energy. The deduction can be applied to expenses incurred on works completed by December 31, 2025, provided they are carried out on the primary residence, a rental property, or a property expected to be rented out before December 31, 2026 (amendment to the fiftieth additional provision of the LIRPF).
  3. Extension of the deadline to apply the 40% deduction for works improving the consumption of non-renewable primary energy: This applies to the primary residence or any property owned for rental use or expected to be rented out before December 31, 2026.
  4. Extension of the 15% deduction for purchasing plug-in electric and fuel cell vehicles and charging stations: This deduction is extended until December 31, 2025 (amendment to the fifty-eighth additional provision of the LIRPF).
  5. Reduction of the imputation percentage for real estate income to 1.1%: Effective January 1, 2024, this reduction applies to properties located in municipalities where cadastral values have been revised through a general collective valuation process effective after January 1, 2012 (amendment to the fifty-fifth additional provision of the LIRPF).

Corporate Tax

The main modification to the IS involves extending the freedom of amortization for investments using renewable energy sources. This extension continues into 2025, allowing taxpayers to freely amortize investments in installations designed for self-consumption of electricity or thermal use relying on renewable energy. This applies to installations replacing those previously using non-renewable energy sources. Investments must be operational in 2025 to qualify for the benefit, with a maximum eligible investment of €500,000 (amendment to the seventeenth additional provision of Law 27/2014).

Other Tax Modifications

Additional changes for this fiscal year include updates to the Tax on the Increase in Value of Urban Land (IIVTNU). New maximum coefficients have been established to apply to the land value at the time of accrual. Additionally, a new tax has been introduced on liquids for electronic cigarettes and other tobacco-related products.

In conclusion, the tax updates for this year present interesting opportunities for taxpayers. However, it is essential to meet the requirements for these benefits and strive to optimize the tax burden.

If you are interested in learning more about the tax updates for this fiscal year or the fiscal incentives that may apply to you, Gentile Law has a team of expert tax attorneys ready to assist you.

Lucía Goy Mastromiechele
luciagoy@gentile.law
+34 626 118 451

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