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Spanish Council of Ministers approves 2019 draft State Budget Bill

Executive summary

On 11 January 2019, the Spanish Council of Ministers approved the 2019 draft State Budget Bill (the Bill), which has been sent to Congress for further discussions and approval.

The text of the Bill has not been published but it is likely that the wording of the tax measures is in line with the tax measures disclosed in the draft Budget plan published on 15 October 2018 (see EY Global Tax Alert, Spanish Council of Ministers approves anti-tax evasion Bill proposal which includes implementation of ATAD and creation of Digital Services Tax and Financial Transactions Tax, dated 19 October 2018).

It is expected that the text of the Bill will be released shortly, once it is formally sent to the Congress as part of the approval procedure.

Detailed discussion


On 15 October 2018, the State Budget plan was approved as part of the negotiation process of the State Budget for 2019, after an agreement was finally reached with the largest political party supporting the Government.

The text of the State Budget plan was reviewed by the European Union Commission which advised that the measures included could impact the agreements reached in the Stability and Growth Pact.

After months of negotiations, the Government decided to move forward and approved the Bill in the Council of Ministers held on 11 January 2019.

The press release issued by the Government provides an overview of the main tax measures included in the Bill.

Tax measures included

In particular, the press release highlights that the exemption for dividends and capital gains derived mainly from foreign subsidiaries would be limited to 5% for large corporations. The mention of “large corporations” was not included in the State Budget plan, and the threshold to qualify as such has not been disclosed. Whether this measure will also apply to domestic exemptions and capital gains, and to income from foreign permanent establishments remains to be seen.

Similarly, the Government intends to include a Minimum Tax on the Spanish companies’ taxable base, at a rate of either 15% or 18% for companies subject to a Corporate Income Tax (CIT) rate of 30% (i.e., financial entities and oil and gas companies).

Finally, a reduction in the CIT rate for small companies, down to 23%, was also announced.


The Bill will be sent to Congress as part of the approval procedure. There is still uncertainty on whether the Government will be successful in passing all or part of the tax measures being proposed.

EY will closely monitor the approval procedure and will publish a more detailed tax alert once the text of the Bill becomes available.

EYG no. 012832-18Gbl

Download this Tax Alert as a PDF file.

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