Up until the 16th century, most of Europe observed the Julian calendar, which made the New Year on March 25. In 1582, when the Gregorian calendar was adopted, the New Year became January 1st, and Jesus' birth was used as the starting date for measuring the passing of time in our era.
The New Year's Eve dinner, on December 31, became a popular event in the early 20th century. As opposed to Christmas Eve dinner, the nature of this ritual is more social, as it is normally celebrated with friends, at a friend's house, bar or inn. Spaniards traditionally go out to the local town square or plaza and eat the traditional 12 grapes for luck, as the bells toll the final seconds to the midnight hour and wishes are made. After dinner, the party continues in the streets well into the night.
In many places, like Argentina and Colombia, another New Year's Eve tradition is to burn a dummy as an effigy of the year past. In Bolivia, this night is reserved for making all types of exciting light arrangements outside. In Brazil, the sea plays a very important role this day: the sky over the Brazilian beaches is lit up with fireworks, and the filhas do santo (African priestesses) light up candles and set out small boats of flowers and gifts to the sea; then they wait to see if the waves carry them away -- a good omen for the year to come.