The Ministry of Finance and Public Function has published this Tuesday an order in the Official State Gazette (BOE) establishing a general reduction in net income of 25% in Personal Income Tax (IRPF) that It will benefit 800,000 farmers and ranchers who pay taxes through the module system.
Specifically, this order includes the proposal of the Ministry of Agriculture, Fisheries and Food to reduce said indices and takes into account the incidence of drought and other exceptional circumstances that affected the profitability of many agricultural and livestock farms during 2022, such as the war in Ukraine, which caused a rise in production costs.
In addition to the 25% reduction in general for all farmers and ranchers, certain sectors that are in a more vulnerable situation will benefit from specific reductions.
Thus, in the case of olive groves, almond trees and beekeeping, the reduction amounts to 50%, while it will be 30% for cereals, oilseeds and legumes, chestnut, peach, nectarine, apricot and other livestock sectors.
The Government has estimated that the set of reductions contemplated in this order represents a reduction in the tax base of the order of 1,807 million euros, making it the most far-reaching in the last decade.
In this way, this order also allows declarants in an objective agricultural estimate of personal income tax to reduce the previous net yield by 35% for the purchase of agricultural diesel, and 15% for the purchase of fertilizers, as established in Order HFP/1172 /2022, of November 29, which develops the objective estimation method of personal income tax for 2023.
In addition, the reductions in the corrective indices that were established last year for feed purchased from third parties and for crops on irrigated land that use electricity are maintained.
Specifically, the rate applicable to livestock activities that feed livestock with feed and other products purchased from third parties is established at 0.5, provided that they represent more than 50% of the amount of food products consumed, and applies to both intensive and extensive livestock sectors. The correction index for crops on irrigated land that use electricity is reduced to 0.75.
In addition, a large number of reductions have been made at the regional, provincial or municipal level in other productions, among which those approved for non-citrus fruit trees in important producing areas stand out.
The Minister of Agriculture, Fisheries and Food, Luis Planas, had already advanced in recent days that the Government of Spain was working on the design of measures to combat the drought, “an exceptional situation”.
Thus, the head of the branch presented last week in the Council of Ministers a report on the fight against drought, which included actions for 2,130 million euros, an initiative that he described as “absolutely necessary from the point of view of better use of water and a decrease in the energy bill”.
The Union of Small Farmers and Ranchers (UPA) has described the Government’s measure of establishing tax cuts as “important and positive”, but considers that it is “insufficient”, due to the “extraordinary severity” of the drought that Spain is going through and that is affecting farmers and ranchers, according to a statement.
“This government measure is a very important first response for many farmers and ranchers, because it will give them liquidity on their farms, since these payments would have to be made in the coming days in a situation as serious as the one that is being experienced. “, has assured the executive secretary of UPA, Ignacio Huertas.
UPA has recalled that this was one of the measures that they proposed to inject liquidity quickly to the professionals in the field affected by the escalation of costs, first, and now by the drought.
A tax reduction as a whole that reaches 1,807 million euros, which they consider a “not inconsiderable figure”, but they have recalled that the losses that the drought is already causing for the countryside in Spain will far exceed that figure, so this measure must be a “first step followed by others in the short, medium and long term”.
In this way, the agricultural organization has claimed that the ‘Drought Table’ must continue to meet and work to address this serious problem that affects a large part of the agricultural sector.
The executive secretary of UPA has considered that it is “necessary to continue working” on the rest of the measures that are raised, such as the issue of direct aid to farms, making the CAP more flexible, allowing reserve funds and EU budget remnants they can be used to alleviate the situation of the sectors affected by the drought or credit lines that are eligible and under preferential conditions, as well as carry out hydrological planning that has among its priorities the improvement of existing infrastructures, the social redistribution of resources and promoting savings and efficiency in the use of water.
For their part, those responsible for Asaja have described as “positive” the downward revision of the net return indices applicable in the objective estimation method (modules) of personal income tax for agricultural and livestock activities in the tax period of 2022 but it has criticized that producers who are in direct estimation have been left out of these improvements “once again”.
As reported by the organization directed by Donaciano Dujo, the tax system of objective estimation or modules is the majority among professionals in the field of Castilla y León and producers with incomes of less than 250,000 euros per year can benefit from it.
“This, together with the simplified VAT method, is the method chosen by farmers because it has less bureaucratic burden and does not require keeping expense accounts,” Asaja explained, insisting that an “important part” of producers is “mandatory” in the direct estimation system, since they exceed the income thresholds, and regrets that they are systematically excluded from tax benefits.
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