What is the Spanish Personal Income Tax Return?

It is that time of year again when our attention turns to the dreaded personal income tax return

It is that time of year again when our attention turns to the dreaded personal income tax return otherwise known “fondly” here as Declaración de IRPF, Declaración de la renta or simply Renta. For some it is a joyous occasion to get money back from the state (how often does that happen?) but for those who perhaps had a particularly good year, it can be a nail biting moment as they discover how much more money they have to pay the tax office. Either way, for the majority, it is a yearly obligation so here are a few titbits on how the Renta works in Spain.

This year, tax residents obligated to submit their tax return on tax year 2014, must do so between 7th April and 30th June. Results may be a rebate in your favour, payment to the tax office or negative where nobody pays but if the result is to pay the tax office back, you have until the 25th June to confirm and pay via direct debit to your bank account. It is also possible to request staged payments if you are unable to pay the full amount in one go.


How do I obtain a copy of my tax return?

AGENCIA TRIBUTARIAThe National Tax Office (Agencia Tributaria) normally sends a draft copy to your registered address based on tax information they have been able to ascertain so if yours is a relatively simple return, you may be able to approve the draft directly via the Internet or by phone. You may also make an appointment at your local tax office and then take the document to your bank. If you do not receive your draft copy, you may access www.agenciatributaria.gob.es using either the reference shown in the previous years return, your pin code or electronic certificate if you have one.

Those who have a more complex return, i.e., business owners may not received a draft copy and are advised to use their accountant to calculate the return for them as there may be other concepts to be included the tax office is unaware of, especially those who are registered as professional self-employed persons and have to apply retentions on their invoices.


How do I know if I am a tax resident in Spain?

  1. This term can be confusing and is considered a grey area but if we go strictly by Spanish law, a tax resident is somebody who spends in excess of 183 days of the year in the country, not necessarily consecutively
  2. Your main source of income is located in Spain whether this is direct or indirectly. Those who have a registered work contract or own a business are classed as tax residents
  3. Your spouse from whom you are not legally separated and dependant underage children are residents in Spain

Your status as either a resident or a non-resident should be registered at the tax office via Tax Form 030 and non-residents submit a different tax return entirely.


What type of income is taxed?

Those derived from the following:

  1. Labour, if there is a work contract between you and an employer in Spain
  2. Professional economic activity as a business owner in Spain
  3. Rental income received
  4. Receipt of interest, dividends etc from financial investments
  5. Profit and loss as a result of property sales, company shares etc


What other information is needed?

The Fiscal Report issued by your bank, documents to confirm your income as well as other details that can be used to apply reductions to the final result, these may be state or autonomous reductions and may include:

  1. Purchase of your permanent residence if the property was purchased before 01/01/2013 as laws have been modified since
  2. Rental payments on your permanent residence but it is likely this concept will not be permitted from next year for new rental contracts
  3. Donations made to non-profit organizations, limitations apply
  4. Working mothers with children under the age of three (adoptions and foster care included)
  5. Pension plans
  6. Investments in new enterprises, limitations apply


Is everybody obligated to declare?

If you work under contract but your gross income does not exceed 22.000 euros a year, you do not have to declare, as long as your income comes from a sole employer. If you have more than one work contract with different employers, you may not have to declare if your gross income does not exceed 11.200 euros but there are exceptions to the rule so please consult.

Others who are considered tax residents but do not work in Spain may still be obligated to declare if their income or pensions from other countries exceeds 11.200 euros per year. In Spain, you are taxed on your worldwide wealth regardless of its origin or whether these have already been taxed at source, however, in some cases there are double taxation agreements that may apply.

Depending on your activity during the course of the tax year, you may find it more beneficial to submit a joint tax return together with your spouse as opposed to an individual return or vice versa.

Good luck everyone and happy rebate (hopefully) season!

About Sabrina L. Williams

Although I was born in the UK, I moved to the Canary Islands, Spain at a young age and I haven't looked back. The Canaries is a fantastic place to live, I mean you can do all types of outdoor activities practically all year round because of the great weather. Horses are my poison but the islands are also a superb spot for water sports so they do attract a lot of attention from people around the world. Anyway, enough about that. Back in 2011, I made one of the biggest, scariest yet best decisions I'd ever made and set-up my own business in the middle of a recession. I love what I do as no two days are the same, plus Spanish law keeps me on my toes as it is constantly changing (often without warning!) so there is always something new to learn. As I've branched out in the world of Administrative Consultancy, I decided to create a blog to discuss topics of interest to others in my industry and my clients, share tips and experiences, to see what new ideas people have for improving their businesses and the like so I hope you'll find the time to join me on this venture...

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