The General Council of Economists (CGE) has issued a warning about the risks that a total exemption from personal income tax would entail (Personal Income Tax) to whom collect the Minimum Interprofessional Wage (SMI). The president of the Registry of Economists and Tax Advisors (REAF), Agustín Fernández, has warned that it is necessary to be prudent because “the measure could strain the principle of fiscal equity” since it would exclude incomes close to each other from paying this tax.
This debate was opened these days within the framework of the REAF 2025 Annual Conference where Fernández made it clear that the distance between the SMI and the average salary has narrowed. In 2023, as an example, the average salary was 15,500 euros per year compared to 15,120 for the SMI of that same year. A total exemption, he noted, would imply that “a growing number of taxpayers would be left out of taxation,” which could cause tensions.
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He explained that, to avoid the “jump error” (a minimum salary increase that would imply a net loss due to the tax), the tax benefit would have to be extended to a broader range of income.
Legal uncertainty and insecurity
The president of the CGE, Miguel Ángel Vázquez, for his part, has also referred to the legal insecurity and uncertainty that can currently be seen in the tax system due, among other things, to the disparity of criteria in the application of tax regulations.
“There are more and more court rulings that include rulings that differ, on many occasions, from the criteria applied by the administration. And this situation causes a lot of insecurity and uncertainty in taxpayers’ decision-making,” he stated in statements collected by Europe Press.
He has given as examples the controversy in the restructuring of companies or the problem of real estate valuations by administration experts when they do not visit the properties ‘on site’.
Outdated IPRF absolute amounts
The CGE tax experts have taken advantage of this meeting to point out that the absolute amounts that regulate the personal income tax rule have not been updated for a long time. These amounts, such as the personal or family minimum, the exempt limit for expatriates, and the amounts exempt from food or accommodation taxes, have become obsolete since they have not been increased taking inflation into account. By legislative technique, they argue, it should be updated annually.
They have also indicated that this review should be “upwards” at least “in the years in which inflation is high because otherwise, the positive effect generated by these taxpayer limits will be diluted over time, becoming increasingly lower in real terms.”
Therefore, if in 2026 the personal income tax is not deflated nor the amounts of personal or family minimums are raised, citizens will lose purchasing power. To this we must add the recurring problem that arises for businessmen and professionals who buy a company vehicle. It is necessary that clear criteria be established for shared use vehicles, as appears in the VAT (Value Added Tax).
A good time to buy electric cars
In their 25 recommendations, economists point out some of the most relevant aspects to take into account in the near future. Thus, to minimize the fiscal cost of Personal Income Tax, these recommendations are given for companies based on the report on the fiscal closing of Corporate Tax.
They indicated that it was a good time for companies to defer income to 2026 and anticipate expenses for the month of December so that they can take advantage of the reduced tax rates for SMEs, providing the capitalization reserve to reduce the final cost.
For personal income tax taxpayers, they have highlighted that before the end of the year, it is a good time to buy electric vehicles or install charging points because it is a benefit that is unknown if it will be extended.