5/2/2019 La Renta: What you need to know about filing your Spanish tax return - The Local

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La Renta: What you need to know about ling your

Spanish tax return

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3 April 2019 08:21 CEST+02:00

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5/2/2019 La Renta: What you need to know about filing your Spanish tax return - The Local

It's tax season in Spain which means confusion and headaches as people try and work out
what their obligations are. This week, the Local Spain explains what you need to know about
Spanish tax returns.

Please note, we are at The Local are not nancial experts. What we've learned, we've learned the
hard way — by getting on the phone and listening to all those frustrating automated messages. 

The information below is designed to help, but if you are unsure of what steps to get yourself in
order tax-wise, seek professional advice.

What’s it called in Spain?

Personal income tax is known as IPRF in Spain (Impuesto sobre la Renta de las Personas Físicas).
Commonly shortened to La Renta.

This is a progressive tax: in other words, the more you earn, the more you pay.

Who needs to le a tax return?

The basic rule applied to determine residency when it comes to tax is the 183 days rule: “if an
individual spends this amount of time or more during a calendar year then he or she is tax resident,”
clari es tax consultants Advoco. 

You probably don't need to hand in a tax return if you earn less than €22,000 a year and you pay tax
on your salary and your bank interest throughout the year.

But if you fall into any of the below categories then you should.

You are employed and have an annual income over €22,000

You are self-employed or have your own business
Your income from yearly dividends, interest and capital gains exceeds €1,600
You receive rental income over €1,000 per year
It is the rst year that you are ling a tax return in Spain

Do you have to pay tax on income earned outside Spain?

The simple answer is yes. If you are classed as a tax resident in Spain (that’s the 183 day rule again)
you will be subject to Spanish tax on your worldwide income, and that includes income from rental
properties overseas.

For people who split their time between two countries, authorities in both countries may examine
their nancial affairs to decide whether they are liable to pay tax in that country. Some countries
have double taxation rules:

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If you are not sure, consultant a tax advisor, accountant or nancial planner.

READ MORE: Do I really need to declare foreign assets to Spanish taxman by March 31st? 

Photo: AndreyPopov/Depositphotos

If you don't live in Spain for tax purposes, but own a house here, you may need to ll in what is
known as a Form 210 (Modelo 210).

How to register as taxpayer

You must register with the Agencia Tributaria, the Spanish tax authority, in order to pay tax in Spain
regardless of whether you are a resident or non-resident.

To do this you will need your NIE, and ll out a Modelo 30 in order to register for the rst time. You
can also use this form if you need to change any personal details such as change of address.

When is the Spanish tax year?

This is one thing that Spain makes simple. The tax year is the same as the calendar year which
means it runs from 1st January to 31st December.

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Photo:

BrianAJacksonDepositphotos

When do you le your tax return?

The ling of tax return for 2018 must be done between April 2 and June 30th – although before
June 26th if online banking, or June 28th if in person at a tax o ce - during which an estimated
20.3 million individual tax returns will be led.

How much tax will you have to pay?

In Spain, as in other countries, the percentage of tax you will have to pay is dependent on your level
of income above a personal threshold of €5.550 (this means you don’t pay tax on the rst €5,550
you earn annually).

These are the tax brackets for 2018:

€0 - €12,450 – 19 percent
€12,450 - €20,200 – 24 percent
€20,200 - €35,200 – 30 percent
€35,200 - €60,000 – 37 percent
€60,000 or more – 45 percent

What allowances/deductions are there?

Individual and Pensioner Allowances

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As mentioned above, you are entitled to an Individual allowance of €5,550 tax free. That increases
to €6,700 for those aged 65 and over and to €8,100 for over 75-year-olds.

Capital Gains Tax Rates for 2018/19

Dividends up to €1,500 are tax free and then increase:

€0 - €6,000 - 19%
€6,000 - €50,000 - 21%
Greater than €50,000 - 23%

Disability Allowance

Grade 33%-65% disability - €3000

Grade 33%-65% disability and third-party care required - €6,000
Grade 65%-100% disability - €12,000

Child Allowance

In Spain child allowance can be claimed for children up to the age of 25 who live with you and earn
less than €8,000.

First child - €2,400

Second child - €2,700
Third child - €4,000
Fourth & additional children - €4,500
Additional for child under 3 - €2,800

Parental Allowance

Deductions are also given to those who have elderly parents living with them – either a mother or
father with an income less than €8,000.

Over 65's - €1,150

Over 75's - €2,550

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Photo: BrianAJacksonDepositphotos

Tax On Property Rentals

Tax on rental income for properties in Spain is charged at a at rate of 19% for those who reside in
the EU, Norway and Iceland and 24% for those residing in all other countries.

Note that rental expenditures such as mortgage interest payments, I.B.I, utility bills and community
fees are tax deductable.

Company Tax

For smaller companies (between 1 and 24 employees and turnover of less than 5 million Euros) the
rates for 2018 are 25%.

Newly formed companies enjoy a reduced rate of company tax of just 15% for the rst two years of
business.

Couple allowances

If you are married,either in a heterosexual or same-sex marriage, you have the choice of being taxed
separately or together.

The married couples allowance (declaracion conjunta) of €3,400 for the second taxpayer, in
addition to the general threshold of €5,550 granted to the rst taxpayer.

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But work out the rate as individuals and together before making the decision as doesn’t always pay
off to declare together.

It’s easy if you are employed and taxed at source

The system is pretty straightforward if you are a salaried worker and your tax and social security
contributions are taken at source. You should be given a certi cate of taxes withheld Certi cado de
Retenciones which calculates your annual contributions to add to the tax return.

How To Submit Your Spanish Tax Return

The website lists four ways of ling your tax return:

Online
Using the App
By telephone
In person at tax o ce

The Agencia Tributaria has streamline the process in recent years so it should be pretty straight
forward but the online system can get pretty clogged up right at the beginning of the ling period
and again as the deadline approaches.

You can either process the application online or using the dedicated App designed for Android or
iOS operating systems. 

The Tax O ce has prepared a YouTube tutorial to help guide you through the process.

Renta 2018 - Renta WEB Open (Simulador)

Rather than
download any sort of app you can Renta Web –which is access through the website and doesn’t
require any additional software.

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Which ever system you choose, you will need to register with the 'Cl@ave PIN' security system to
allow you to access your personal data securely online. Get one either via the Agencia
Tributaria page here or by booking a cita previa (appointment) at one of the many regional Tax
Agency o ces.

If you don't want to do it online/App then there is the option of speaking to an adviser at the Tax
O ce who will talk you through the process. These scheme is called 'lo llamamos' 

Phone: 901 22 33 44 or 91 553 00 71 Lines are operational Monday to Friday 9 am to 7pm.

Or book a Cita Previa (private appointment) at the tax o ce and go down there in person. Although
this service is only available between May 9th and June 28th. 

What happens next? 

If you are due any overpayment of tax, it will usually be credited direct to your bank account within
one month of submitting your return.

Essential Information: 

Spain's Tax Agency website HERE

Advoco, for Spanish tax and accountancy services in English WEBSITE HERE

tax life in spain

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