Approval of Decree Law 5/2025: Key Tax Modifications.

Today, Wednesday, March 26, the Official Gazette of the Government of Catalonia (DOGC) published Decree Law 5/2025 of March 26, 2025, which adopts urgent measures in tax matters, personnel expenses, and other administrative issues.

Which taxes are affected?

Among others, it includes modifications to the Personal Income Tax, Inheritance and Gift Tax, and finally, the Property Transfer Tax and Stamp Duty, which are detailed below:

Personal Income Tax (effective from 01/01/2025)

1. Reduction of tax rates for the first brackets of the regional scale and a more balanced expansion of brackets (reducing from nine to eight).
2. Inclusion in the deduction for birth and adoption of the situation of foster care for minors.
3. Update of the deduction for renting a primary residence through the following modifications:

• Increase in the maximum income limit received by the taxpayer for applying the deduction (from €20,000 to €30,000).
• Increase in the maximum deduction limit to €500.
• Removal of the requirement that 10% of the taxpayer’s net income must be allocated to rent.
• Increase in the maximum age to benefit from the deduction to 35 years.
• Creation of a 20% deduction for investments in newly created or existing agricultural and housing cooperatives (with a maximum limit of €3,000 per year).

Inheritance and Gift Tax (effective three months after publication in the DOGC)

1. Creation of a reduction for the donation of a home that must become the primary residence for victims of gender-based violence and/or funds for its purchase, as well as a 99% tax reduction on inheritances for direct descendants or ascendants of a deceased victim of gender-based violence.
2. Extension of the period from 3 to 6 months to acquire a primary residence for the existing reduction for money donations to descendants for purchasing a primary residence.

Property Transfer Tax and Stamp Duty (effective three months after publication in the DOGC)

Property Transfer Tax

1. The rate on real estate transfers, as well as the establishment and transfer of real rights, is modified through:

• the inclusion of two additional brackets in the taxable base table (€600,000 or less at 10%, €600,000–900,000 at 11%, €900,000–1,500,000 at 12%, and over €1,500,000 at 13%).
• Establishment of a 20% rate for the purchase of housing by large holders (whether individuals or legal entities), also applicable to acquisitions of entire residential buildings. Exceptions will be included for individuals (subject to specific requirements).

2. Repeal of the 70% tax reduction for real estate companies on property transfers.

3. The tax benefits include the following changes:

• 50% tax reduction on the transfer of office buildings or unfinished structures if converted into social housing.
• A 5% tax rate on the purchase of primary residences for victims of gender-based violence.
• Increase in the maximum age for applying the 5% reduction on primary residence purchases to 35 years.
• 100% tax reduction on the transfer of artworks and antiques if the taxpayer is a professional art dealer and resells them within one year.
• 0% tax rate on transfers of 'zero-emission' vehicles.
• 100% tax reduction on housing cooperative transfers classified as non-profit.
• 50% tax reduction for property transfers intended to establish business headquarters or professional offices.

Stamp Duty (AJD):

• Creation of a 100% reduction on Stamp Duty for the notarized transfer of a primary residence for young people if subject to VAT.
• Increase of the AJD rate to 3.5% for property transfers when VAT exemption is waived.
• 50% reduction on AJD for property transfers for the construction of housing or business headquarters.
• Reintroduction of the 50% AJD reduction for notarized deeds of subdivision into horizontal property regimes approved by Law 5/2020.