The end of the year is approaching and it is time to stop and think about whether we have any margin left to reduce our tax bill in 2023. What should we take into account in each case? Let’s take a look at some points that can help us plan our personal income tax for 2023:
- Pension plans are no longer fiscally attractive as the threshold for deductions is reduced to €1,500 per year, except in the case of company contributions or sector-specific or disability pension plans, in which case the thresholds are higher.
- Redemption of pre-2007 pension plans can benefit from the 40% reduction in more than one tax year, so it is advisable to redeem gradually over 3 years rather than in full.
- Those who retired in 2021 have until the end of 2023 to decide whether to partially or fully redeem by applying the 40% reduction.
- The delivery of shares up to €12,000 per year is exempt provided they have been offered under the same conditions to all employees, which increases to €50,000 in the case of start-ups.
- Severance payments are exempt up to €180,000 provided that the employee leaves the company, with the excess of the 30% reduction being eligible as irregular income.
- Income from rental property: in the case of permanent housing for the tenant, the tax reduction of the net yield is reduced to 50% in 2024 for contracts signed from 2024, so if you are thinking of signing a rental contract, it is better to do so before the end of the year, as the reduction is 60%.
- Reductions in personal income tax of between 20% and 60% are also applied to amounts paid for work carried out to improve the energy efficiency of dwellings rented for permanent housing use. This deduction is only available until the end of 2024.
- The subsidies obtained are taxable, whether from the homeowners’ association, the digital Kit or support for entrepreneurship, so it is advisable to review those obtained in the financial year or whether it is advisable to defer their application and obtaining them to the following year.
- In the case of divorce or dissolution of community property, it is necessary to avoid excess awards in order not to be taxed on the capital gain obtained.
- In the case of persons over 65 years of age who wish to transfer their main residence, the gain obtained is exempt from personal income tax.
- For taxpayers subject to the module system, it is time to review the limits for continuing to benefit from this system or whether it is more beneficial to be taxed under the direct taxation system (the option must be expressed in December).
- It is essential to check whether there is irregular income or income generated in more than 2 years to which the 30% reduction can be applied.
- Deduction in new or recently created companies: 30% of the amount disbursed (maximum base €60,000) at the date of disbursement. It is increased to 50% and the maximum base to €100,000 in the case of start-ups.
- Deduction for the purchase of plug-in electric vehicles: 15% on a maximum base of €20,000 of the purchase value (valid until the end of 2024).
- Sales of assets expected in 2023: it is worthwhile to use the forward transaction regime in order to be able to count each part of the price in the year in which it is collected on the basis of a payment schedule.
- Following the Constitutional Court’s confirmation of the legitimacy of the HST, good planning is needed to reorganise your wealth and ensure that the requirements for the application of the wealth tax exemption are met.
- Provision for the loss of the investment in an insolvent company: if the insolvency judgment was issued in 2023, it is in this year that the loss can be computed.
Samir Haddad