The field can take advantage of the reductions due to the drought and the increase in costs

The Government has reminded the nearly 900,000 farmers and ranchers throughout Spain that they can take advantage of the 20% reduction in net income approved for the entire agricultural sector in Royal Decree-Law 4/2022 on measures to mitigate the effects of drought and increased production costs. They have done so before the end in the coming weeks of the term to present the Income Statement 2021- and that they choose the IRPF module system to pay taxes on their benefits.

Added to this reduction are the reductions in the Net Return Indices for the 2021 tax period in the objective estimation system of the Personal Income Tax collected in the order of the Ministry of Finance published in May, at the proposal of the Ministry of Agriculture, Fisheries and Food, after collecting the reports from the autonomous communities, on the reduction of said indices.

Beneficiaries in Extremadura

In Extremadura, the effect of the reductions established at the state level is high, as they are important productions within their territorial scope, and benefit all agricultural and livestock activities.

The sectors that benefit from this measure are, in the agricultural sectors, grapes for wine with DO from 0.32 to 0.22 and grapes for wine without DO from 0.26 to 0.18.

On the other hand, in livestock sectors, beekeeping from 0.26 to 0.13; dairy cattle from 0.20 to 0.14; breeding cattle from 0.26 to 0.18; meat sheep from 0.13 to 0.09; dairy sheep from 0.26 to 0.18; meat sheep from 0.13 to 0.09; dairy goat from 0.26 to 0.18; goat meat from 0.13 to 0.09; pork meat from 0.13 to 0.09; breeding pig from 0.26 to 0.18; poultry from 0.13 to 0.09; rabbit farming from 0.13 to 0.09 and horses from 0.32 to 0.22

All these measures may lead to a reduction in the tax base estimated at 67 million euros for Extremadura. Some 28 million euros correspond to the reductions in the rates of the aforementioned agricultural activities, while another 38 million euros would be for the extra 20% reduction in yield to deal with the drought. Just over 55,000 farmers and ranchers from Extremadura took advantage of the objective agrarian estimation regime in 2019.

Terms and benefits

The deadline for submitting the declaration of the Income Tax of Physical Persons corresponding to 2021 (IRPF 2021) will end on June 30 for declarations both to be deposited and to be returned, although the term in the declarations to be deposited with direct debit will end on June 27.

It is estimated that the set of all these module reductions could imply a reduction in the tax base of the order of 1,093 million euros, which benefits the 900,000 farmers and ranchers The agricultural objective estimation system is the majority among farmers and ranchers in our country. The module reductions approved in this order translate into a proportional decrease in the tax base derived from the income from agricultural activity.

These reductions reflect the loss of profitability derived from the negative effects caused by the climatic adversities of 2021, such as the Filomena storm in January, the frosts in March and the lack of rainfall throughout the year.

The order includes the reduction at the state level of the net yield indexes of all the livestock and vineyard sectors. In addition, a large number of reductions have been approved in specific sectors by autonomous communities, provinces and municipalities, among which the one applied to nuts in important producing areas stands out.

In addition, extraordinarily for all farmers who feed livestock with feed and other products purchased from third parties, provided that these represent more than 50% of the total amount of animal feed, the rate applicable to livestock activities is reduced. It is estimated that the reduction for this concept can reach 38 million euros. The single rate for all livestock sectors will be 0.50.

Likewise, and in an extraordinary way due to the difficulties of the situation, for the first time, it is extended to all irrigation, and not only to seasonal consumption, the reduction of the correction coefficient for the use of electricity for irrigation that has been applied is increased in previous years. Thus, farmers who use electricity for irrigation will benefit from a 25% reduction in the net yield for irrigated crops (the previous year it was 20%), It is estimated that this measure will mean a reduction of about 39 million euros.