Tax Reform in Catalonia 2025

The main new features introduced by this decree will be analysed in detail below.

1. Modifications to the Personal Income Tax (IRPF).
2. Modifications to the Tax on Property Transfers and Documented Legal Acts (ITP/AJD).
3. Modifications to the Inheritance and Donations Tax.
4. Modifications to the Tax on Stays in Tourist Establishments.
5. Measures in the Public Sector.

The amendments to the Personal Income Tax (IRPF) are set out in Article 3 of Decree Law 5/2025, of 25 March, of the Generalitat of Catalonia, which modifies Articles 611-1 and following of the sixth book of the Tax Code of Catalonia. The main developments in this area are as follows:

• Reduction of one point in the rate applicable to the first bracket of the IRPF, which goes from 10.5% to 9.5%. This measure aims to ease the tax burden on taxpayers with lower incomes and to bring Catalan taxation closer to that of other autonomous communities.
• Simplification of the Catalonia regional IRPF scale, which goes from having 9 brackets to 8 brackets. This simplification, in line with changes in the tax rate, seeks to make taxation in the region more homogeneous. It should be noted that the regional bracket will be added to the applicable state bracket at any given time.

These amendments affect the structure of the IRPF in Catalonia in order to establish a more efficient tax system adapted to the needs of taxpayers with lower economic capacity.

Within the framework of Decree Law 5/2025, new deductions are introduced in the IRPF, in order to benefit certain groups and promote access to housing. Below are the main deductions incorporated into the legislation:

1. Deduction for birth, adoption or fostering (article 612-1)

This deduction is established under the following terms:

• In the joint declaration of the parents, the deduction is 300 euros.
• In the individual declaration, the deduction for each parent is 150 euros.
• In the declaration of the parent of a single-parent family, the deduction amounts to 300 euros.

2. Deduction for rental of the main residence (article 612-3)

The age and income requirements to deduct the rental of the main residence are adjusted, with the following modifications:

• The maximum age to access the deduction is raised from 32 to 35 years.
• The income limit is increased from €20,000 to €30,000.
• The maximum deductible amount is raised from €300 to €500 (€1,000 in the case of joint taxation and for large or single-parent families).
• The requirement that the rent exceeds 10% of the taxpayer's income to access the deduction is removed.

Additionally, three new deductions are established:

• Deduction for the habitual rental of victims of gender-based violence (article 612-11): Up to €1,000, which can reach €1,200 in case of disability equal to or greater than 65% or if there are dependents.
• Deduction for capital contributions to agricultural and housing cooperative societies (article 612-12): Up to €3,000.

These deductions are a measure to alleviate the tax burden on families and vulnerable groups, promoting home ownership and supporting people in situations of special need, such as victims of gender-based violence.

The measures contained in Decree Law 5/2025, of 25 March, of the Generalitat de Catalunya, focus on improving access to housing, with special emphasis on the application of reduced tax rates for certain groups.

However, what really makes a difference in this tax reform in Catalunya 2025 is not a reduction in taxes, but an increase in taxation on the purchase of homes valued over €600,000.

The tax reform implemented by Decree Law 5/2025 includes a significant increase in taxation of properties whose price exceeds €600,000.

This change, which directly affects the Property Transfer Tax (ITP), means that, although properties of lesser value continue to be taxed at the previous rate, those with a price above this threshold will see a rise in the tax rate, which will impact the acquisition cost.

Additionally, a new tax rate of 20% for large property holders is included, which is considered a measure aimed at regulating the market and preventing real estate speculation.

Before Decree Law 5/2025:

After the reform of Decree Law 5/2025:

With the approval of Decree Law 5/2025, significant changes have been made to the taxation on the purchase of homes in Catalonia, especially in relation to the Property Transfer Tax (ITP).

These reforms affect both the taxable base and the applicable tax rate depending on the value of the acquired property. Below, we present three comparative examples of the taxation before and after the reform, in order to illustrate the impact of the fiscal changes.

The reforms introduced by Decree Law 5/2025 in Catalonia mean a progressive increase in tax rates for home purchases with values exceeding €600,000, which directly impacts the tax cost for buyers.

From now on, purchases of higher-value homes will be taxed at a higher rate, with a 1% increase for homes between €600,000 and €900,000 and a 2% increase for homes exceeding €900,000. Additionally, large property holders will be taxed at 20% on property purchases, representing a specific measure to regulate access to the real estate market in a context of growing speculation.

It is important to take these changes into account to properly plan real estate acquisitions and anticipate the tax implications that may arise from the purchase of homes in Catalonia from 2025 onwards.

With the entry into force of Decree Law 5/2025, of 25 March, of the Generalitat de Catalunya, various favourable tax measures are introduced aimed at promoting access to housing, especially among younger groups and those non-profit entities dedicated to the construction of housing. Among the most notable reforms are new deductions and allowances, along with the creation of reduced rates for certain groups of buyers.

The Decree Law 5/2025, of 25 March, introduces important modifications to the Inheritance and Donations Tax in order to strengthen the protection of victims of gender-based violence. These modifications are reflected in article 4, which amends article 632 of the sixth book of the Tax Code of Catalonia. The main modifications in this area are as follows:

• In the inheritance modality: A 99% discount on the tax quota is established when it concerns heirs of a victim of gender-based violence. This measure aims to protect and facilitate the transfer of assets to the heirs of the victims, significantly easing the tax burden in already difficult situations.
• In the donations modality: If the victim of gender-based violence receives a property intended as their main residence or money to acquire it, a 95% reduction on the value of the property or the donated amount will be applied, with a limit of €100,000 (and up to €200,000 if the victim has a disability equal to or greater than 65% or has dependents). This reduction seeks to promote the economic and housing stability of the victims, facilitating their access to their own home.

Regarding the Tax on Stays in Tourist Establishments, Decree Law 5/2025 introduces measures affecting both the rates and the management of revenues. The main changes are as follows:

• Doubling of the tax rate: In all categories, the tax rate is doubled. In Barcelona, the payment would range between €2 and €7 per person per night, while in the rest of Catalonia it would be between €1.2 and €6. This measure increases tourism revenues, and part of these funds will be allocated to housing policies.
• Allocation of 25% of the revenue to housing policies: For the first time, 25% of the revenue from the Tax on Stays in Tourist Establishments will be allocated to housing policies. This responds to the need to improve access to housing in a context of high tourist demand.
• Purpose of the revenues from the Fund for the Promotion of Tourism: The purpose of the revenues generated by the Fund for the Promotion of Tourism is regulated, which will be allocated to key areas such as sustainability, seasonal adjustment, preservation of tourist resources, and low-emission mobility. Additionally, the scope of sectors where municipalities can allocate these resources is expanded, incorporating housing, economic promotion, and promotion of industry and competitiveness.
• Municipal surcharge for town councils: Town councils are enabled to approve a municipal surcharge of up to €4 per person per night. In the case of the Barcelona City Council, which already applies this surcharge, it is authorised to increase it up to €8. This measure allows municipalities to manage tourism-derived revenues more efficiently and allocate them to their local needs.

The Decree Law 5/2025 also introduces reforms in the field of the public sector, specifically in the regulations governing the Catalan Institute of Finance (ICF). With the amendment of these regulations, the aim is to expand the beneficiaries of the loans, allowing individuals to access financial products that were previously only available to companies, self-employed workers and entities. This measure aims to facilitate access to credit for those who need financing, especially in the field of protected housing, sustainability and environmental protection.

• Renewable energy for the public sector: In line with the Government's commitment to promoting a cleaner and more efficient energy model, L'Energètica will be responsible for supplying energy from renewable sources to the Parliament of Catalonia, the Statutory Guarantees Council, the Ombudsman, the Audit Office, the Catalan Audiovisual Council and the Catalan Anti-Fraud Office. This measure strengthens the commitment to sustainability within the institutional sphere.

The main tax changes introduced by Decree Law 5/2025 will come into effect according to the following deadlines:

1. Property Transfer Tax and Stamp Duty (ITPAJD): The new tax rates will come into effect on 27 June 2025, three months after the publication of the Decree. The removal of the 70% discount for the transfer of homes to real estate companies applies immediately, the day after the publication of the Decree, according to the repealing provision.
2. Inheritance and Gift Tax: The changes will come into effect on 27 June 2025, three months after its publication, according to the second final provision.
3. Personal Income Tax (IRPF): The change in the IRPF comes into effect the day after its publication, that is, on 27 March 2025.

It is important to keep these deadlines in mind to comply with the new tax regulations.

The Decree Law 5/2025, of 25 March, introduces several tax improvements aimed at alleviating the tax burden on lower incomes through the reduction of the tax rate in the IRPF, as well as promoting access to housing for young people, by raising the age limit to benefit from reduced rates on the purchase of a main residence up to 35 years.

However, although the age extension is positive, it is important to point out that the income limit has not been increased, which could have been an even more beneficial measure for this group.

Nevertheless, the increase in the property acquisition tax, especially for properties valued over €600,000, and the elimination of the 70% discount for the transfer of homes to real estate companies, are aspects we see as negative. These measures do not favour access to housing nor will they, in our opinion, cause a reduction in prices. In fact, in cities like Barcelona, where housing prices continue a constant rise, this reform seems to have a revenue-raising purpose rather than a genuine fight against real estate speculation.

In summary, although the tax reform offers improvements for certain groups, the increase in the acquisition price of homes and the changes in the tax treatment of real estate companies do not seem to be the solution to combat speculation nor to promote real and affordable access to housing, especially in a context of continuous price increases in Catalonia.