On 21 December 2024, Law 7/2024 of 20 December (“Law 7/2024”) was published in the Spanish Official State Gazette. In addition to regulating the Complementary Tax that ensures a global minimum level of taxation for multinational and large national groups (transposing Council Directive 2022/2523 of 15 December 2022, also known as “Pillar 2”), it introduces significant tax developments for Spanish taxpayers.
For individual taxpayers, Law 7/2024 increases the tax rate for taxable income exceeding €300,000 included in the Personal Income Tax savings base (e.g., interest income, dividends, income from life insurance, capital gains). Effective 1 January 2025, the highest tax band (income/gains above €300,000) will see an increase of two percentage points, from 28% to 30%.
The applicable tax rates for savings income and capital gains for Spanish tax residents from 1 January 2025 onwards are as follows:
This increase applies to all Spanish tax resident individuals, including those benefiting from the special tax regime, also known as the ‘Beckham Law’. The rest of the Personal Income Tax rates for general income and savings income/capital gains remain unchanged for Spanish resident taxpayers during the 2025 tax year.
Given this change, it is more important than ever for Spanish resident taxpayers to invest in assets or products that offer Personal Income Tax deferral benefits, such as unit-linked life assurance products.
In summary, the increase in the maximum Personal Income Tax rate for savings income and capital gains highlights the need for strategic tax planning. Spanish resident taxpayers should consider leveraging tax-smart investment products to mitigate the impact of this change.