Spanish Government has presented its latest plan in order to decrease public deficit. The reforms include a temporary reduction in VAT on new house purchases (from 8% to 4%) and an adjustment to the advanced payment of corporation tax.

The tax reduction for new houses only lasts four months, until 31 December 2011 and aims to reduce the surplus on the property market, give a boost to the construction industry and reduce the high number of real estate in hands of Spanish banks.

The proposal also includes a modification of corporate tax related procedures for companies with a revenue of over 20 million euros per year (which is 0.5% of the total number of Spanish companies, or about 3,900 companies). Specifically, during the years 2011-2013, a higher percentage of the payable benefit tax should be advanced (obviously, this advances will be deducted from final tax return).

For more information on these reforms and the extent to which these changes affect your situation, please contact Ibersupport.