Fernández de Soto Blass, María Luisa and Álvarez García, Santiago
The personal income tax applied in the member states of European Union. The case of Spain..
In: "Global Conference on Business and Finance. GCBF 2008", 09/01/2008-12/01/2008, Sheraton Waikiki, Hawaii, EEUU. ISBN 1931-0285.
In the Communication on "Tax policy in the European Union - Priorities for the years ahead" (COM/2001/260 of 23 May 2001), the Commission reiterated its belief that there is no need for an across the board harmonisation of Member States' direct tax systems. For tax policy, the Communication established, as a main priority, the need to address the concerns of individuals and businesses operating within the Internal Market by focusing on the elimination of tax obstacles to all forms of cross-border economic activity, in addition to continuing the fight against harmful tax competition. This approach was confirmed in the Communication "The contribution of taxation and customs policies to the Lisbon strategy" (COM/2005/532 of 25 October 2005) (European Commission, 2006). The Spanish Law No 35/2006, 28 th November of Personal Income Tax, reformed that tax. The long-term capital gains will be taxed at 18% (before 15%) ;the tax scale will be comprised of only 3 or 4 brackets (before 5) and the top marginal rate (before 45%) will be reduced; and some tax credits and allowances (acquisition of permanent home and contributions to pension funds for example) were readjusted in order to make them more accessible to low-income earners. The present paper makes a brief approach to the harmonisation in the European Union, explains the reform of the Spanish Personal Income Tax, introduces new figures and formulas never seen before at book of taxes, analyses the concept of the Spanish Personal Income Tax, studies the elements of this tax as the beneficiary, taxable person, territoriality, basis of assessment, exemptions, explains the basic mechanism of the tax, deductions, the taxable base, the tax rates, collections and examples. This paper is the result of three researches that the authors are carrying out at The Institute for Fiscal Studies, Ministry of Economy and Finance, University of CEU San Pablo, Madrid and University of Oviedo Spain from 2006 to 2008.