PIT

Youth PIT

The Youth PIT tax regime is extended, making it applicable to income from employment and self employed work earned by taxpayers (not dependents) who are up to 35 years old, while also eliminating the condition related to the completion of a cycle of studies.

The duration of this benefit is extended to ten years. It applies in the first year of income generation in which the option for the benefit is exercised and in the nine subsequent years in which income is obtained and the option is also exercised.

There is also an increase of the applicable exemption as follows:

• 100% in the first year;
• 75% in the second, third, and fourth years;
• 50% in the fifth, sixth, and seventh years;
• 25% in the eighth, ninth, and tenth years.

The amount of exempt income under the above terms is limited to an amount corresponding to 55 times the value of the Social Support Index/IAS (€ 28,737.50, considering the IAS in force in 2025).

However, a transitional regime is created which establishes that taxpayers start to qualify for this exemption in the year following the number of years of income generation from categories A and B already elapsed, not considering, for this purpose, the years in which they were considered dependents.

The exemption does not apply in the years in which income from categories A and B is not earned, resuming its application for the remaining years income is obtained by the taxpayer, until a total of ten years of exemption or the age limit of 35 years is reached.

This benefit does not apply to taxpayers who:

1. benefit or have benefited from the regime applicable to non-habitual residents;
2. benefit or have benefited from the tax incentive for scientific research and innovation, provided for in article 58-A of the Tax Benefits Code (EBF);
3. have opted for taxation under the tax regime applicable to ex-residents;
4. do not have their tax situation regularized.

The taxpayer may request that the paying entity reflect the application of this regime in the withholding taxes due, by informing the entity of the year of application of the exemption he/she currently is.

Specific deduction – Category A and Category H

There is an update of the specific deduction applicable to employment and pension income to an amount corresponding to 8.54 times the value of the IAS. Based on the IAS value for 2025, the specific deduction amount will be € 4,462.15.

Autonomous taxation rates

There is an update of the limits for the acquisition cost of passenger or mixed vehicles from € 20,000 to € 30,000 for the purposes of applying autonomous taxation on expenses incurred by taxpayers who have or should have organized accounts, within the scope of a business or professional activity.

Payments on account

The amount of the payments on account due by taxpayers earning category B income is reduced to 65% of the amount resulting from the application of the applicable formula (previously 76.5%).