What’s new in Spain 2021: Price changes and general budget
- By Maxine --
- 11 Jan 2021 --
- comments are disable
There are quite a few changes this year as Spain’s general budget was approved in Dec 2020. We’ve rounded up the major ones and how these could affect your finances.
General budget measures
The main areas that will affect most people are:
- Increase in tax on insurance premiums. Households that have car, home or funeral insurance will see their premiums rise this year. Tax that is levied on these products will increase from 6% to 8%. Life insurance will not be affected. Expect to see a basic increase of 2€ per 100€ of insurance, plus whatever your insurance company might sneak in hoping you don’t notice!
- New green taxes. A new tax on single-use plastics will be introduced from July 2021. It’s expected that some of the cost will be passed on to the final consumer in the way of higher prices. Additionally a new tax levied on waste disposal companies may work its way to households that pay a waste tax along with/as part of their IBI tax.
- Increase in the IPREM index. The IPREM is used to calculate those eligible for some grants and subsidies. These range from education grants, help with nursery fees and unemployment benefit, amongst others. The index has been increased by 5% after being frozen for the last 10 years.
- Increase VAT on sugary drinks. VAT will rise from 10% to 21% except for dairy products. Expect to see higher prices on drinks at the supermarket.
- A reduction in the amount you can deduct in your tax return for the payments made into a Spanish individual pension plan. Previously you could include up to 8000€ paid into your pension plan per year in order to reduce your tax burden. From 1 Jan 2021 this amount has been reduced to 2000€ per year.
- Retirement pensions have been increased by 0.9%.
Additional measures include higher taxes for those earning over 200,000€ per year. There is also an increase in capital gains tax for those with assets worth 10 million euros or more.
More changes in 2021
An additional tax will be charged on the majority of new petrol and diesel cars from 1 Jan. This will mean an increase in price of around 5%. No tax will be levied on 100% electric and plug-in hybrid cars.
Road tolls will go down on average by 0.11%. Also from September some parts of the AP-2 and the AP-7 will see a total removal of tolls.
Postage stamp prices will increase. For national letters prices go up by 7.7% and to the EU by 3.4%. For many other countries the increase will be around 22%. Higher prices will also be applied to parcels.
A new tax on share purchases will be introduced. 0.2% will be charged when you buy shares through a broker in any high-value Spanish company.
Possible and pending changes
The railway infrastructure owner, Adif, has reduced the charges applied to Renfe for use of the network. This could lead to lower ticket prices, or at least no increases. Additionally from 15 March the French brand OuiGo will launch their low cost Madrid-Barcelona route. This new competitor could also put a stop to any planned Renfe price hikes.
The main telecoms companies will probably continue to increase tariffs in exchange for more services (that you may not need).
In 2020 the reviews of property rateable values (valor catastral) were lower than planned due to the pandemic. In 2021 the Government plans to review nearly one million properties, in many cases increasing the rateable values. Any increase will affect the amount of IBI tax due. However, as each Town Hall can decide whether to apply a deduction to this tax the final effect will depend on where you live.
