The Ministry of Finance and Public Functions published an order in the Official State Gazette (BOE) this Tuesday, announcing a 25% reduction in the net return for Personal Income Tax (IRPF). The measure aims to support around 800,000 farmers, including those taxed under the module system who operate in agriculture and livestock sectors.
The order reflects guidance from the Ministry of Agriculture, Fisheries and Food and takes into account drought and other exceptional conditions that affected farm profitability in 2022. Factors like the war in Ukraine have driven up production costs, prompting adjustments to tax rules to ease farmers’ financial burdens.
Beyond the general 25% tax relief for farmers and ranchers, specific sectors deemed more vulnerable will receive targeted reductions. The relief is set at 50% for olive groves, almond cultivation, and beekeeping, while cereals, oilseeds and pulses, chestnut, peach, nectarine, and apricot sectors will see a 30% reduction, alongside various livestock groups. This tiered approach aims to cushion the impact of price shocks and input costs across diverse agricultural activities.
The Government estimates that the series of discounts outlined in this ranking will amount to €1.807 billion in tax base reductions, marking one of the broadest tax relief packages of the past decade. The measure signals a deliberate effort to stabilize rural incomes amid environmental and global pressures.
In addition to the reduced tax base, the order enables declarants to apply an objective estimation method for Personal Income Tax relevant to agriculture. It lowers the previous net yield by 35% for purchases of agricultural diesel and by 15% for fertilizer purchases, as established by Resolution HFP/1172/2022 dated November 29, which set out the 2023 objective estimation framework for IRPF.
Furthermore, the reductions tied to corrective indices introduced last year remain in place for feed purchased from third parties and for crops grown on irrigated lands using electricity. The net effect is a more predictable tax position for farmers who rely on external inputs and irrigated water usage, helping to shield farm cash flow from volatility.
Specifically, the rate applied to livestock operations that feed animals with externally sourced feed and other goods is set at 0.5, provided these inputs account for more than half of the total feed consumed. This adjustment covers both intensive and extensive livestock sectors. Additionally, the correction index for crops on irrigated lands using electricity has been reduced to 0.75, reinforcing support for irrigation-dependent farming practices.
Regional, provincial, or municipal discounts are also available in other production areas, with notable emphasis on non-citrus fruit trees in key growing regions. These local incentives complement national relief and reflect the government’s intent to tailor aid to regional agricultural realities.
Luis Planas, the Minister of Agriculture, Fisheries and Food, recently stated that the Spanish Government is actively drafting measures to address the drought emergency. He noted that drought presents an ongoing challenge requiring swift policy responses to protect water resources and farm viability.
In conjunction with these efforts, the head of the department presented a report on drought mitigation to the Council of Ministers last week. The package includes actions totaling 2,130 million euros, described as essential to better water management and lower energy costs for farming communities and households alike. This initiative underscores a broader commitment to resilience in agriculture and rural economies amid climate pressures.