Rodríguez Badal stresses that the approval of the regulation of the Fiscal Regime of the Balearic Islands is “a new milestone in the compensation of insularity”

The Government has given the green light to the tax incentives approved in the PGE 2023 and which recognize the uniqueness of the Balearic territory, with the aim of attracting employment and investments to the archipelago

The government delegate, Alfonso Rodríguez Badal, assured on Tuesday that the approval of the regulation of the Special Tax Regime of the Balearic Islands is “a new milestone in the compensation of insularity”. The Council of Ministers has given the green light to the tax incentives approved in the PGE 2023 and which recognize the uniqueness of the Balearic territory, with the aim of attracting employment and investments to the archipelago.

“The Government is once again standing side by side with people, companies and the economic and social fabric, to give a new impetus to the economy of the islands, and to overcome, together, the difficulties entailed by the particular fact of our specific geography,” said Rodríguez Badal, who presented the details of these measures at a press conference.

The Royal Decree of the Council of Ministers that develops the regulation of the Special Tax Regime of the Balearic Islands will enter into force with its publication in the Official State Gazette (BOE), although the fiscal measures that are approved will produce effects from the beginning of the tax periods of the Corporation Tax, the Income Tax of non-residents and the Income Tax of Natural Persons corresponding to the fiscal year 2023. It consists of two main instruments: the Investment Reserve, which consists of a reduction in the tax base of the Corporation Tax or the Income Tax of non-residents, or a deduction in the quota of the Income Tax of Natural Persons; and the Special Regime for industrial, agricultural, livestock and fishing companies, which consists of a bonus of the full quota for the taxpayers of the aforementioned taxes.

The regulation has been the result of previous coordination work with the Autonomous Community and aims to be the legal instrument that dispels potential interpretative doubts, allows the most effective and simple possible application of the planned measures, provides legal certainty to legal operators and clarifies some legal concepts.

A definite step in the deployment of the REIB

The approval of the regulation of the special tax regime is another step in the deployment of the Special Regime for the Balearic Islands (REIB), which is made up of three pillars: the economic, the fiscal and a financial instrument aimed at compensating the economic consequences inherent to the island, especially in terms of public investment.

Through the approval of Royal Decree-Law 4/2019, of 22 February, the aspects related to economic measures and the financial instrument were developed, with the provision, mainly, of economic measures for certain sectors especially affected by insularity, such as energy, air and maritime transport of people, goods and waste, port and airport materials, land transport and the nautical sector.

It also includes the regulation of the Insularity Factor as an endowment in the General State Budgets of each year intended to finance actions in the Balearic territory in certain areas specially affected by insularity.

However, the special regime lacked the adoption of complementary fiscal measures; measures that were finally approved by the Law on General State Budgets for the year 2023, which introduces, for the tax periods that begin between January 1, 2023 and December 31, 2028, the special fiscal regime of these islands, whose regulation will now enter into force.

The government delegate stressed the importance of this new measure, as a result of the Executive’s will to move “towards the fulfillment of each and every one of its commitments.” “This is a necessary rule so that we are not victims of our own geography, wonderful and fragile islands, with an economy that requires aid that palliates insularity and that activates investment in innovation, environmental protection, the generation of quality employment and the improvement of our living conditions,” added Alfonso Rodríguez Badal.