State Budget for
2020: Positive in balance, negative in tax burden.
The government’s current 2020 State Budget proposal does not present any fiscal disruption changes.
Obviously, given that it is being discussed in the Assembly of the Republic, changes arising from the debate in the specialty can always be introduced in the final law.
But whatever happens, it will not be a budget known for having operated a tax reform, but for presenting a positive budget balance rather than traditional deficits.
In the measures contained in the OE 2020 proposal, there is no reduction in the high tax burden that mainly affects individuals, despite the introduction of some benefits, in particular with regard to income from work earned by young people during the first three years of activity, as well as in the increase of the deduction by more than one child up to two years of age.
The update of the levels and deductions is scarce, being at 0.3%, when the expected inflation for 2020 is in the order of 1.2%.
At the tax level, the following themes should be highlighted in particular:
- increase in the irc tax base bracket level subject to the reduced rate of 17%, which goes from €15,000 to €25,000;
- extension of the patent box regime to copyright stemming from computer software;
- increase in the relevant value for DLRR, which goes from €10,000,000 to €12,000,000;
- application of the stamp duty exemption to cash pooling;
- changes in CULTURAL VAT rates (access to animal and bullfighting exhibition spaces); And
- increased general real estate taxation.
On this last point, the increase in the general taxation of real estate in the OE 2020 proposal is felt at various levels, either directly or indirectly.
In real estate, the following will obviously be reflected:
- increasing the tax base of local housing income under the simplified scheme from a rate of 35% to a rate of 50%;
- increase in imt to 7.5% in the case of incidence amounts exceeding one million euros, taxation of gains that are considered non-existent due to the allocation of real estate to business activities and their subsequent reallocation to non-business activities (not despite the proposed exclusion of taxation in case of allocation to lease for more than five years);
- imi of land for construction in housing areas.
Furthermore, we must not forget that the high external demand in this area is to be reduced due to the conditions of the foreign markets of origin of investment, and these investors have been contributing to the economic recovery and rehabilitation of certain parts of the country.
Still within this theme, one cannot overlook the impact that a possible reduction of real estate investment zones relevant for the purposes of Visa Gold can have on the value of real estate and consequently on the entire economy.
Finally, to mention that extraordinary contributions remain “stone and lime”, contrary to the initial nature of temporary contributions.
We have also seen the entry in OE 2020 of a new contribution on medical devices, along with a reduction in the extraordinary contribution to the energy sector.
In conclusion, the OE 2020 Proposal does not present significant changes in tax, leaving us at least more aware of a maintenance of current tax rules and of not being again faced with a reform in the seat of OE.
Fiscal Technical Committee