Income tax or in Spanish IRPF (Impuesto sobre la renta de las personas físicas) is a tax for Residents in Spain that is filed every year. Remember in Spain the tax year runs from the 1st of January till 31st December.
This year residents Spain will have to file their tax returns related to the year 2012 between the 24 April and the 1 July 2013, online or between 6 May and 1 July through other means.
Non-residents in Spain who own assets on the Spanish territory will have to file for non- resident tax. In this case the deadline is until the 31 December 2013.
What is income according to Spanish law?
According to Spanish law income can include 6 main components:
· Returns from work (salaries, fees, pensions…)
· Returns from financial assets (dividends from financial products, interests on bank accounts…)
· Returns from real estate (rentals from properties…)
· Income from economical activities (professional fees, returns on businesses…)
· Patrimonial incomes or losses (inheritances, transmissions…)
· Equivalent income from property of real estate that is not rented and is not the primary residence
The income tax has to be calculated on the incomes worldwide and not related to Spain only. Nevertheless Spain has Tax agreements with more than 100 countries worldwide preventing double taxation. If you have incomes coming from abroad you should check if they are covered by a tax agreement and see how they have to be treated and declared. When there is no treaty with the country where the income is coming from, you may deduct the foreign tax paid. Your tax advisor or lawyer will be able to help you with this.
Who has to declare taxable income in Spain?
1) As a general rule self employees need to file form 100 regardless their incomes.
Instead employees with returns from work above 22,000€ and coming from a single source. The same limit applies also:
· In case the income is coming from multiple sources and the sum of the second and the other sources is below 1,500€. (For example, two pensions would count as two sources of income even though you would add them together on your declaration or if you were unemployed for 3 months and received unemployment benefices and then employed by a company).
· The only incomes are coming from Spanish social security pensions.
The limit decreases to 11.200€ if:
· The total income is coming from multiple sources and in case the sum of the second and the other sources is greater than 1,500€, annually.
· The income has a component coming from compensation or maintenance pensions from the spouse following a divorce or a separation.
· Incomes that are not subject to Spanish income tax, for example government pensions from foreign countries taxed at the source and covered by an international tax agreement involving Spain.
2) People receiving incomes from financial assets above 1,600€, annually.
3) People with equivalent incomes from real estate (including any grants for special property purchases) above 1,000€, annually.
4) People with losses on economical activities above 500€, annually. Benefits of filing a tax declaration even if it is not compulsory. If you want to benefit from specific tax deductions, you will have to file your tax returns in any case. For example if you want to benefit from an exemption from an international double taxation agreement or if you want to be exempt from capital gain tax after a property sale.
Regards to exemption from capital gains tax after a property sale you will have to comply to all the following conditions:
· Be more than 65 years old.
· Having resided on the property for more than 3 years.
· Having been a fiscal resident in Spain for more than 3 years.
The guidelines of this article are only general and any specific case should be analyzed by a Spanish Tax expert or lawyer.