The regulation of carried interest for Personal Income Tax for the first time in Spain in the Historical Territories of Gipuzkoa and Bizkaia

The regulation of carried interest for Personal Income Tax for the first time in Spain in the Historical Territories of Gipuzkoa and Bizkaia

Abstract:

Foral Law 3/2019 of 11 February of the Historical Territory of Gipuzkoa has introduced for the first time in the Spanish legal system the regulation of carried interest for Personal Income Tax purposes, establishing it will qualify as capital income to be taxed in Gipuzkoa at the savings taxable base at a maximum tax rate of 25%. Likewise, on 23 August 2019, a Foral Decree was published in the Official Gazette of Bizkaia, that introduces the regulation of carried interest for Personal Income Tax purposes in the Historical Territory of Bizkaia. The Foral
Decree qualifies carried interest as salary income obtained in a “notoriously irregular manner” applying a 50% exemption on the income received without any limitation, with the excess being subject to the general taxable base at a maximum rate of 49 %.
This article explains carried interest and how its taxation has been regulated in each territory.

Keywords: carried interest, Gipuzkoa, Bizkaia, managers, private equity, capital income, irregular income.