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On 27 October 2020, the Spanish coalition Government approved the Draft 2021 Budget Bill. One key corporate tax provision is to reduce the participation exemption for dividends and capital gains to 95%.

The Spanish Government also approved a tax bill on 13 October 2020 that introduced several other tax measures, including the implementation of certain provisions contained in the EU’s Anti-Tax Avoidance Directive (“ATAD”) and an overhaul of the tax haven rules to align with EU and OECD standards.

Some of the corporate tax measures included in these two legislative proposals could apply retrospectively to tax years commencing on or after 1 January 2020.

In the newsalert below, we analyse the corporate and individual tax measures included in the 2021 Spanish Draft Budget Bill and, in particular, those which may require action by investors in Spanish real estate to ensure that tax implications are effectively managed.