Analysis of the amendments introduced to Personal Income Tax by Law 26/2014, which amends Law 35/2006

Abstract

Last Friday 28 November, it was published in BOE the Law 26/2014, of November 27, which modifies Personal Income Tax Law 35/2006, of November 28, among others.

In the present paper, the different amendments enacted by Law 28/2014 are examined according to the current Personal Income Tax Law structure for sake of a better comprehension, together with some practical cases in the most conflict situations.

As it will be noticed, important amendments with regard to Personal Income Tax are made: some in favour of the taxpayers, such as the reduction of the tax rates or the increase of certain personal & family rebates applicable, the creation of a new reduction for low earnings self-employed and the new deductions for large families. On the other hand, other measures to increase the tax collection, such as the 180.000 euro cap exemption to compensations granted for employment termination, the elimination of the dividend exemption, the deletion of the step-up coefficient, the 400.000 euro cap to apply the amortization coefficient on certain asset sales, the reduction of the payments into the pension fund schemes, the creation of an exit tax for residents shifted to other jurisdictions and the deletion of the rent deduction.