How to make File an Income Tax Return in Spain?

 

What is an Income Tax Return?

The Income Tax return is an annual procedure required by the tax agency for residents in Spain. It should be noted that not everyone is required to file a personal income tax return, as it depends on the income obtained throughout the year.

What is the purpose of making the declaration?

The income tax return is used to settle the PIT (Personal Income Tax). If the withholding tax paid is greater than the actual amount to be paid by the taxpayer, the tax agency will refund the difference. If the opposite happens, the taxpayer must pay the determined amount.

How do you know if you are obliged or not to do the IRPF?

Whether or not you are obliged to file the declaration depends on the payers that the person has, in the case of having a single-payer and the work income exceeds €22,000 per year, they must submit the Personal Income Tax return.

On the other hand, if a person receives income from two or more payers and thus obtains a full income from work greater than €14,000 per year, they must present it, except when the sum of the second payer and subsequent as a whole does, not exceed €1500, in which case the limit will be €22,000 per year.

Personal Income Tax brackets for 2022

Annual revenueTax rate

 

<12.450 €19 %
12.450 – 20.200 €24 %
20.200 – 35.200 €30 %
35.200 – 60.000 €37 %
60.000 – 300.000 €45 %
>300.000 €47 %

 

It should be noted that the rates are progressive, to exemplify it, if a person obtains an annual income of €28,000, the first €12,450 this individual will pay 19%, the following €7750 will be taxed by 24% and finally for the remaining €7800 will be taxed by 30%.

Where to make the income tax return?

There are 3 options in which you can present the declaration.

The first is through the internet, it is the most comfortable way, by going to the website of the Treasury with Renta Web. This allows you to access the program and make the income tax return, where you will need to identify yourself, with the reference number of your declaration, have a PIN key, digital certificate or electronic DNI.

Secondly, you can resort to the “We Call You” plan  of the Tax Agency and have the help of a Treasury manager, who will make the declaration thanks to the data you exchange in a scheduled telephone conversation (the manager, in addition, has all the information that the Treasury knows about you). This telephone service can be requested through the AEAT website, it’s Mobile App or by calling 901 12 12 24 for automatic attention or 901 22 33 44 or 91 553 00 71 for personal attention during working hours (from 9am to 7 pm).

Finally, you can make an appointment with the Treasury and carry out the income tax return step by step at the Treasury offices, with the help of an AEAT technician. To do this, you must request an appointment with the Treasury has from the month of May. If you are clear that you will need this help, it is important that you make an appointment as soon as possible, because there are limited places.

How to make the tax declaration?

The first step is to prepare all the information we will need. The declaration breaks down this data into DX, where X is the step number and information.

  • First of all, income: D1 is all invoices entered, that is, taxable base without VAT or withholdings. Then the D2 will be the total withholding of the invoices that we have made during the year.
  • For example, if I issue every month an invoice of €100 with VAT 21% (€21) and 15% of Personal Income Tax (€15). In total, I have that during a year I have invoiced 12 times with this amount, so the D1 will be €100 x €12 = €1200 (Total taxable base of all invoices) and the D2 will be only the IRPF withheld, that is, €15 x12 = €180 (Total withholdings).
  • Secondly, the expenses: D3 will be to take all the self-employed quotas that we have and we will add them up. The D4 will be the rest of the expenses and the tickets that you have been able to save.
  • Thirdly, you must go to your bank account and review the withholdings that have been made during the PREVIOUS YEAR. For example, withholdings of the interest that your money has generated in the bank.
  • Fourth, we will review if the rent of our home is deductible. This is a bit of a complex part, it will only work if you registered as the owner of the rent of a flat before January 1, 2015, since the Government changed the law and this deduction is no longer in force. However, those who did have it in the previous year, will continue to do so. In addition, it is only for people who pay for a flat and who are owners (which is not the same as owners).
  • Scenario 1: if your rental contract is signed BEFORE 01/01/2015 you can deduct the rent as long as you are the owner – which is not the same as the owner.
  • Scenario 2: If your rental contract is signed BEFORE 01/01/2015 but you are not the owner, you will not be able to deduct the house.
  • Scenario 3: if your rental contract is AFTER 01/01/2015 you will not be able to deduct it in any case.

In the second step we must fill in the declaration with personal data.

  • First of all, we must enter the Portal Renta Web application of the Tax Agency.
  • Secondly, we will fill in the first part (Autonomous Community to which it belongs, type of declaration, marital status, among others).
  • Thirdly, we must be specific with the “concepts” that will appear on the following pages: in the first if we want to donate 0.7%, in the second and third our family situation and dependants appear, in the fourth we indicate our payroll; on page 5 and 6 we must provide information referring to the exploitation of movable and immovable property; from page 7 – 8 to 13 concepts related to income are indicated of the economic activity, if we are self-employed indirect estimation, we will fill in page 7. If we are a freelancer in objective estimation (modules), we will fill in page 8. The rest of the special activities can be found on page 13.
  • Fourth, we find tax-deductible expenses (they are those that the regulations allow you to deduct from your income to adjust the payment of taxes). Which differ in two types, other exploitation consumption and Social Security. It is possible to separate the expenses and differentiate them, in this case it could be separated into rental expenses, professional services and financial expenses (interest on loans).

At the end of our statement two cases may occur:

Case 1 (Positive declaration): The resulting fee is greater than the income on account and the advance withholdings, the declaration will be paid, we must pay the relevant amounts to the tax agency.

Case 2 (Negative declaration): The amounts that we have been contributing to the tax agency (income on account and withholdings) are greater than the resulting fee, in this case the declaration will be returned, that is, the tax agency must pay us the resulting amount.

Keep in mind that the return must be requested and indicate and IBAN in which we want the amount to be returned to be paid.

Third and last step, we must deliver the model 100.

The model 100 is necessary to send through the application, or if it can not be done by hacienda, in it we can find a button in which you only have to sign and send (we attach the file and present it telematically).

 

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