In 2025, Spain is set to increase several taxes, with the combined impact on household and corporate budgets projected to reach nearly €18 billion.
Since 2018, Spain has consistently introduced new taxes and increased existing ones. The year 2025 will be no exception. The Ministry of Finance plans to boost tax revenues by over €7 billion, which translates to an additional tax burden of €371 per household. On top of that, social security contributions for entrepreneurs and employees will increase (in the latter case, most of the burden will fall on employers), amounting to an extra €215 to €1,100 per year.
Tax Changes in Spain in 2025
Tax hikes and new levies will affect 10 categories of goods and services:
- VAT on Food
Throughout most of 2024, basic food items were subject to a 0% VAT rate. Starting January 1, 2025, the zero rate will be replaced by reduced rates depending on the product type: 4%, 7.5%, or 10%.
- VAT on Electricity
Electricity bills have increased significantly in January 2025 due to the VAT rate jumping from the reduced 10% to the standard 21%.
- Waste Collection Tax
A new waste collection tax will be implemented starting April 2025 in municipalities with populations over 5,000. Taxpayers will face significantly higher charges, and categories of citizens previously exempt will lose that benefit.
- Excise Duty on Tobacco Products
Starting April 1, 2025, e-cigarette liquids and vapes will be taxed on par with traditional tobacco under excise regulations. This will impact both retailers and consumers and inevitably drive up product prices.
- Banks and Energy Companies
A progressive tax will apply to banks’ interest margins and service fees, reaching 7% on taxable bases exceeding €5 billion. This tax is not deductible under corporate income tax. The fate of the temporarily imposed tax on energy company profits remains undecided.
- Personal Income Tax (IRPF)
The top rate of income tax will rise from 28% to 30% for annual earnings over €300,000. This includes income from deposits, dividends, insurance payouts, and real estate sales.
- Corporate Income Tax
Small and medium-sized enterprises (PYMEs) will benefit from a reduced corporate tax rate of 20% (down from 25%). In contrast, large corporations with foreign income will face higher rates.
- Mobile Operators
From January 1, 2025, Spain’s largest mobile operators—Movistar, Vodafone, and Orange—have raised their tariffs by 3–5%, amounting to an average of €2–6 per month or €24–76 per year.
- Toll Roads
In 2025, tolls on state-run roads (R-2, R-3, R-4, R-5, AP-41, M-12, AP-36, AP-7 Cartagena-Vera, and AP-7 Circunvalación de Alicante) will rise by 2% for vehicles without electronic toll devices and up to 5% for those using electronic payment systems.
For toll roads under public concessions, tariffs will increase by 3.84% to 5.45% depending on the concession agreement. Affected routes include AP-51, AP-61, AP-6, AP-53, AP-66, AP-7 Alicante-Cartagena, AP-7 Málaga-Guadiaro, AP-68, AP-71, AP-9, and AP-46.
- Postal Rates
Domestic and international postal rates have increased by an average of 1.5–9%, depending on the type and weight of letters and parcels.
Personal Income Tax Relief (IRPF) in Spain for 2025
Taxpayers will be able to take advantage of several deductions when filing for the 2025 fiscal year:
- Child Deduction: Regardless of the mother’s employment status, she can claim up to €1,200 per child under the age of 3.
- Pension Plans: Taxpayers with pension plans can deduct up to €1,500.
- Sale of Primary Residence by Seniors: Taxpayers over 65 who sell their primary residence in Spain in 2025 will be exempt from declaring the capital gain.
- Investments in Startups and New Companies: A 30% deduction is available for investments up to €60,000 per year.
- Union or Political Party Membership: Taxpayers can deduct up to €600 if they confirm membership in a union or political organization.
- Mortgage Interest: Individuals who bought their home before January 1, 2013, can deduct 15% of their mortgage payments, up to a maximum of €9,000.
- Rental Deductions: Deductions for rent depend on regional legislation and vary by autonomous community.
- Charitable Donations: Donations made throughout the year may qualify for deductions of up to 80%.
Tax Incentives for Home Energy Efficiency Improvements and Electric Vehicle Purchases
The Spanish government has extended existing IRPF deductions through the end of 2026 for:
Energy Efficiency Improvements in Housing
Taxpayers can claim deductions ranging from 20% to 60% of expenses:
- 20% Deduction: For renovations reducing household energy consumption by at least 7%. Capped at €5,000 per property.
- 40% Deduction: For works that reduce non-renewable primary energy consumption by 30% or upgrade energy rating to class “A” or “B”. Capped at €7,500.
- 60% Deduction: For upgrades to multi-unit residential buildings that reduce non-renewable energy consumption by 30% or improve the energy class to “A” or “B”. This must apply to the entire building. Capped at €15,000 per housing unit.
Electric Vehicle Purchases
The tax deduction for electric vehicle (EV) purchases and installation of charging stations is extended until December 31, 2025.
Taxpayers can deduct 15% of the total purchase price (including related expenses and taxes) of a new EV, with a maximum base of €20,000.
Additionally, in mid-February 2025, the Spanish government announced the extension of the MOVES Plan, which includes direct subsidies for EV buyers. However, updated terms and limits have not yet been confirmed.
In 2024, subsidies under the MOVES Plan included:
- €7,000 for EVs priced under €45,000 when scrapping an old car (over 7 years old).
- €4,500 without scrapping an old car.
- For hybrids with a range of 30–90 km: €5,000 with scrapping or €2,500 without.
- For electric motorcycles: €1,100–€1,300.
- For electric vans with a range over 30 km: €7,000–€9,000.
