Spain's 2021 State Budget: spending, pensions, taxes and social security

Automatic summary, not yet reviewed

1. The State budget for 2021 is approved, with spending credits of 456,073,237.41 thousand euros, funded by estimated revenues and by borrowing.
2. Public sector pay and the wage bill of labor staff can only rise 0.9% from 2020. Public employment offers follow replacement rates of 100%, with 110% in priority sectors and 115% for State security forces and regional and local police.
3. Social Security and Clases Pasivas pensions rise 0.9% in 2021, and non-contributory pensions 1.8%, reaching 5,639.20 euros a year. A 525-euro annual supplement is set for non-contributory pensioners who live in a rented home.
4. Personal income taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings. (IRPF) rises for the highest incomes: new brackets of 24.5% on the general base and 13% on the savings base are added, and the limit for contributions to pension plans drops to 2,000 euros a year, with an extra 8,000 for employer contributions.
5. Under the Corporate Income Tax, exempt dividends are reduced by 5% as management expenses, so only 95% of the dividend or income remains exempt.
6. Drinks with added sweeteners move to the general 21% VAT rate, and the tax on insurance premiums goes up from 6% to 8%.
7. Fixed-amount State fees rise by 1%, except fees created or updated since 2019 and gambling fees, which stay the same.
8. Social Security contribution bases and rates are set for 2021: the maximum base is 4,070.10 euros a month and the general rate for common contingencies is 28.30%, split between employer and worker.

Who it affects

• Public employees and public sector labor staff: Their pay can only rise 0.9% and temporary hiring is limited to exceptional cases.
• Pensioners: Their pensions rise 0.9% (1.8% for non-contributory ones), with maximum limits and minimum supplements.
• IRPF and Corporate Income Tax taxpayers: They pay more on the highest incomes, exempt dividends are reduced and pension plan contributions have a lower limit.
• People who buy insurance or sweetened drinks: They pay 8% instead of the previous 6%, and drinks with added sweeteners move to the 21% general VAT rate.
• Workers and companies paying Social Security contributions: Their contribution bases and rates are set for 2021, with a maximum base of 4,070.10 euros a month.

Words worth knowing

Tasa de reposición (replacement rate)

Maximum percentage of new positions a public administration can offer, based on how many employees leave.

Pensión no contributiva (non-contributory pension)

A pension for people with few resources who have not contributed enough for a regular pension.

Base liquidable (taxable base)

The amount on which tax rates are applied, after deductions.

Complemento por mínimos (minimum supplement)

Extra money paid to pensioners so their pension reaches the legal minimum amount.

Clases Pasivas (State civil service pension scheme)

The pension scheme for older civil servants, before the current Social Security system.

income tax

The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries