Economic Stimulus Package Law Approved
(May 2008)

On April 18 last, the Spanish Council of Ministers approved a package of tax and economic measures that is to provide an injection of 10,000 million euros to families and companies in the hope of stimulating the Spanish economy and reversing the current slow-down.

The measures, approved by Royal Decree and Law and agreement by the Council of Ministers, have two objectives: one social, to protect employees, companies and families; and another to stimulate the economy through the budget.

The tax reduction is one of the most significant measures contained in the Royal Decree. It will consist of a 400 euros reduction to the Income Tax applied to wage earners, pensioners and the self-employed from July. 200 euros will be applied to income in July and the rest will be applied eq ually to income in August and December.

According the Spanish Economy Minister, Pedro Solbes, the measure will help 16 million tax-payers and will have a favourable impact on consumption.

This is another of the initiatives in the plan. It will enable families to extend the amortisation term of their mortgages on primary homes.

The extension will be subject to the agreed price reached between the applicant and the financial entity. Those interested in doing so will have until April 22, 2010, to take advantage of this measure.

Another of the measures, which will mainly affect companies, is the return of VAT. From 2009, companies will be able to accelerate returns of Valued Added Tax and, if they so wish, may choose to receive this return on a monthly basis instead of the yearly basis applicable to the majority at the moment.