It is widely known that Spain was hit particularly hard by the economic crisis. The Spanish government has announced that it will adopt several fiscal measures intended to generate additional income for the Treasury Department.

One of the measures being taken is the withdrawal of the yearly 400 euro income tax deduction. This deduction was introduced in 2008, and will no longer be available as of 01/01/2010.

Additionally, the rate of VAT (IVA) on goods and services will be raised by two percent. As of 1 July 2010 the VAT will be raised from 16% to 18%. The lower rate of 7% placed on food, restaurants, transportation and property may be raised to 8%, and the lower rate of 4% placed on necessities, will remain unchanged.

The tax rate for small and medium enterprises will be dropped by 5% for companies who are able to maintain their current level of employment (the current 25% for the first 120,000 Euros of profit will drop to 20%).

Finally, capital gains taxes (interest, dividends, sale of property, etc.) will be raised from 18% to 19% for the first 6,000 Euros, and to 20% for amounts above 6,000.