The draft General State Budgets for 2021 currently being processed by the Congress of Deputies includes a tax reform that would entail a tax increase of several billion euros, focused largely on large companies and high incomes. Faced with the anticipation that the accounts will end up being ratified, some of these taxpayers have begun to maneuver to try to circumvent, or at least lessen, the increase in the tax burden that is coming on them anticipating operations this year. This has been verified, at least, from the Registry of Tax Advisory Economists (REAF).
“There is movement and consultations” in this regard, revealed yesterday, the president of REAF, Agustín Fernández, defending that “companies are acting in a timely manner to save money on taxation.” This is the case, for example, with the intention of the Ministry of Finance to reduce from 100% to 95% the exemption in force today on dividends and capital gains received by Spanish companies on their national or foreign subsidiaries and investees. An amount free of taxation from which, if the reform is successful, 5% will be taxed at 25% of the general type of Companies (although firms that invoice less than 40 million euros will be exempted for three years). The measure will affect the 1,739 largest companies in the country, 0.12% of the total, and seeks to raise 1,520 million.
The measure, which was initially announced in the autumn of 2018 within the framework of the PSOE and United We Can budget negotiations for 2019, already provoked a significant advance on dividends to avoid a tax that was not approved. The same happened at the end of last year due to the fear that the current Government partners would launch it this year. And the phenomenon, tax advisers confirm, is repeating itself now.
Asked about this risk during the presentation of the accounts before Parliament, the Minister of Finance, María Jesús Montero, advanced that she trusts that the limitations on the payment of dividends imposed this year during the pandemic will help limit this loss of income.
“Individuals are managed in a different way, perhaps with less capacity for action and decision” than corporate groups, but they have also begun to streamline operations in order to avoid the tax increase, confirm from the REAF. “There are very clear operations, such as transmitting a good”, illustrates Fernández, because “if you have the possibility of doing it in November it is better than in January because you are going to save three tax points on savings income”. In other cases, he adds, it is opted to “advance income, such as the rescue of a pension plan, because if you raise your rate above 300,000 euros”, it will be taxed at 23% this year and 26% in 2021.
In any case, the movement is still moderate, waiting to see if the Budgets end up prospering and they do so in the terms defined by the Treasury, said the president of the General Council of Economists (CGE) Valentín Pich, in the same tax meeting with the press , which served as the culmination of the professional conferences on taxation, auditing and insolvencies organized by the CGE and REAF in recent days and which have brought together virtually more than 1,200 specialists.
Beyond the future of public accounts, Pich questioned the macroeconomic fundamentals on which they are based. “It is reasonable to think that neither the expenses nor the income will be as expected, because the Budgets were prepared earlier and the fourth quarter is being very negative,” stressed the president of the economists, adding that, although the rebound GDP in the third quarter was “better than expected”, the surprise came on the negative side in the fall, with a second wave of the pandemic and more forceful restrictions than expected.
At the same time, the Council of Economists propose a series of measures “that prevent an exceptional and unpredictable situation, such as this crisis, from causing the return or preventing the enjoyment of tax incentives from companies that, under normal circumstances, would have been consolidated without problems”. This is the case of those who capitalized their unemployment to set up a company that has had to paralyze now before completing the five years of activity that are required to avoid paying taxes. In addition, the Council urges the approval of tax incentives for job creation and considers that the recent extension of the bankruptcy moratorium is a “palliative measure”, but that it is urgent to act and orchestrate debt restructurings that avoid a wave of business insolvencies.