Extension of Ukraine war aid plus tax, energy and social measures

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1. The reduced VAT on basic foods is extended until September 30, 2024: 0% for bread, milk, cheese, eggs, fruit, vegetables, cereals and olive oil, and 5% for seed oils and pasta. From October 1 to December 31, 2024 the rates rise to 2% and 7.5%, and from January 1, 2025 olive oil is permanently taxed at 4%.
2. The reduction for employment income under 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 from 6,498 to 7,302 euros per year, so people earning up to 15,876 euros (the minimum wage) pay no income tax and do not have to file a return for that reason.
3. Companies can freely depreciate investments in new electric vehicles and charging infrastructure that start operating in 2024 and 2025. The capitalization reserve is also strengthened, now allowing a 15% reduction of the taxable base.
4. Public sector employees' pay rises by a maximum of 2% compared with the end of 2023, effective January 1, 2024, plus an additional 0.5% if the sum of the harmonized inflation index for 2022 to 2024 exceeds the accumulated fixed increases.
5. The Social Impact Fund is created, with up to 400 million euros, to invest in projects with social or environmental impact. It will be managed by COFIDES and can invest directly or through investment funds.
6. Several energy measures are extended until December 31, 2024: the support mechanism for energy-intensive industry, the temporary flexibility of electricity supply contracts and the guaranteed supply to vulnerable consumers. The electricity social bonus discounts are permanently raised by 10% and will decrease gradually until July 2025.
7. Homeowners' communities can indefinitely access the last resort natural gas rate, and those already on the temporary rate are automatically moved to the new one. The MOVES III electric mobility aid is extended until December 31, 2024, with an additional 200 million euros.
8. Aid for the La Palma volcanic eruption is extended until the end of 2024: deferrals and exemptions from Social Security contributions, self-employed cessation-of-activity benefits, temporary layoff schemes and a new moratorium on loan payments for those affected in El Paso, Los Llanos de Aridane and Tazacorte.

Who it affects

• Consumers and families: They keep paying less VAT on basic foods until the end of 2024 and keep discounts on their electricity bill if they are vulnerable.
• Low-wage workers: Those earning up to 15,876 euros a year no longer pay income tax or have to file a return for that reason.
• Public sector employees: Their pay rises by up to 2% from January 1, 2024.
• Self-employed people and businesses in La Palma: Contribution exemptions, cessation-of-activity benefits and debt moratoriums linked to the volcanic eruption are extended.
• Energy-intensive industries: Mechanisms that reduce their electricity and gas costs are extended until the end of 2024.

Words worth knowing

Tarifa de último recurso (TUR)

Regulated maximum price for natural gas that designated suppliers can charge consumers entitled to it.

Bono social eléctrico

Discount on the electricity bill for domestic consumers in a situation of vulnerability.

Amortización libre

Free depreciation: the ability to deduct the cost of an investment as an expense without following the fixed-year schedule in tax tables.

Expediente de regulación temporal de empleo (ERTE)

Temporary layoff scheme: a procedure allowing a company to temporarily suspend or reduce its workers' contracts.

Entregas a cuenta

Advance payments the State transfers to the autonomous communities and local governments as part of their funding.

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