Under the new measures, those with most money will be taxed more. / sur

When will Spain's reduction in income tax and other new measures announced by the government take effect?

The measures include a reduction in personal income tax for those earning less than 21,000 euros a year, a temporary tax on the very rich and changes to company taxes

MARÍA ALBERT Madrid

On Thursday, the Spanish government approved a new two-year fiscal package, which will come into force in 2023. The measures include a reduction in personal income tax for those earning less than 21,000 euros a year, a temporary tax on the very rich and changes to company taxes.

Finance Minister María Jesús Montero explained that until now the reduced rate of income tax has only applied to people with an annual income of less than 18,000 euros. Now the limit is to rise to 21,000 euros and those whose income is under 15,000 euros will be exempt from this tax altogether. Anyone who earns over 200,000 euros a year will pay an extra one per cent: 27% instead of the present 26%.

These new measures will also affect people whose wealth totals more than three million euros, as a new and temporary tax is being introduced. It will have three brackets, ranging from 1.7% to 3.5%.

When will the rate of personal income tax change?

The new fiscal package is part of the 2023 Budget; it will take effect on 1 January 2023 and will apply until the end of 2024. The government estimates that the reduction in personal income tax will save taxpayers a total of 1.8 billion euros over the two years.

These new measures will not affect annual tax returns for 2022, because the existing rules continue to apply until the end of this year.