With regard to the approval in the Historical Territory of Gipuzkoa of Provincial Law 1/2023, of 17 January, approving certain modifications for the year 2023, we have prepared an informative note detailing the main modifications introduced, some of which are effective as of 2021 and 2022.

Among the various tax changes, some of the extraordinary measures introduced to alleviate the effects of the energy crisis, the rise in prices and the war in Ukraine are extended exclusively for the year 2022, for example, (i) in personal income tax, the reduction percentages for deductible expenses for the determination of net income in the simplified form of the direct estimation method are extended, and (ii) in corporate income tax, the reduction in the tax base foreseen for micro-companies as tax compensation for the difficulties inherent to their size is maintained at 15%.

On the other hand, some of the Covid-19 measures introduced in previous years are established on a permanent basis, aimed at making some of the requirements for certain tax incentives more flexible, specifically, (i) in the area of personal income tax, the requirements for the deduction for the participation of workers in the employing entity or for the incorporation of entities by workers have become more flexible, and (ii) in corporate income tax, in particular with regard to Article 64Bis (deduction for financing R&D&I projects), as regards the extraordinary deadline for formalising the contract and the cases in which it may be modified, subject to prior notification to the tax authorities.

In addition, the formula for calculating values and assets not assigned to economic activities in relation to total assets is expressly included in the Corporate Income Tax, among others, in relation to asset-holding companies.

And, in Wealth Tax, with regard to the exemption of holdings in business entities, (i) the perimeter of the family group is extended to fourth-degree relatives in the case of a joint holding of 20% and (ii) two new cases of exemption are established for those cases in which the qualifying holding for access to the exemption has been reduced (5% or 20% joint holding).

Link to the circular: Main tax changes introduced in the Historical Territory of Gipuzkoa for 2023..