MADRID: Under a tax reform package adopted at the end of last year, the personal income tax rates were to be cut in two phases, with the second phase scheduled for 2016. However, Prime Minister Mariano Rajoy announced on July 2, 2015, that the second phase of reductions would be implemented from the beginning of July.
Under the changes, the minimum personal income tax rate was reduced to 19 percent and the top marginal rate was slashed to 45 percent. The new rates are expected to save taxpayers around EUR1.5bn (USD1.65bn). The tax reform also cut the number of personal income tax rates from seven to five. The minimum rate now applies to annual income exceeding EUR12,450, and the maximum rate is levied on income exceeding EUR60,000.
Rajoy said that it was possible to enact the new rates earlier because of improvements in tax collection and the economy in general. However, the tax cuts also come in the run-up to elections. The tax reform package also included a reduction in the corporate tax rate from 30 percent to 28 percent this year, with a further reduction to 25 percent scheduled for 2016.
