PROPOSAL ON VAT AND RETURN OF CAPITAL TAX
The Spanish Government has approved a proposal in the law (it is likely that the Parliament will approve it) that will increase the taxes in Spain. The 400 Euro deduction applied in the Income tax will be taken away and the tax on return of capital will increase between one and three points. Therefore the present rate of 18% will be increased to 19% for returns up to 6.000 Euros. For higher returns the tax will be 21%. (If the Spanish Parliament approves it, this will come into effect in January 2010)
At the same time, the VAT will also increase. The general rate of 16% will change to 18%, the reduced rate of 7% will change to 8% and the very reduced rate will maintain at the same level. These changes will come into effect from the 1st of July 2010
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