The Spanish government has recently enacted a Royal Decree amending the Personal Income Tax Regulations. This measure aims to prevent workers earning the minimum wage, or amounts close to it, from being subject to withholding tax or advance payments.
To achieve this, the thresholds of employment income exempt from withholding have been revised, and a new deduction has been introduced for low-income earners. These measures are effective from the date of entry into force of the decree and will be complemented by further provisions concerning the deduction for employment income and filing requirements.
This Royal Decree is based on the state’s competence in matters of general taxation and adheres to the principles of necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency. With these reforms, the government aims to ease the tax burden on lower-paid workers and promote employment and economic growth.