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Law in Spain

Law in Spain is a dedicated Blog to advise British Expats living in Spain about their legal issues through the expertise of Abad Abogados lawyers. The main purpose of this blog is helping Expats to find useful and updated legal tips to deal with Spanish Bureaucracy.

Do you need to submit a Spanish tax return?
21 April 2015 @ 13:42

Spanish Tax Returns

 

Once again the time of year has arrived for your tax returns to be prepared. We have put together the following information to help you decide if you need to submit one...

Firstly,and most importantly, you need to be aware that the deadline for presentation of the 2014 return is 30th June 2015. If it results in you having to pay tax, you can split the amount into two payments, with the first due on 30th June 2015 and the second on 5th November 2015. Payments by direct debit must be set up by 25th June 2015 at the latest.

 

 

Income Tax in Spain

 

Looking at the Income Tax return itself, it is a direct tax levied on the income of resident individuals. The return, knows as “la Renta”, is normally prepared once a year and must include: salaries/earnings; income obtained from employment or self-employment, any other earned income; interest and pensions etc, and any income derived from properties and investments; rental income and dividends etc. The individual’s entire worldwide income has to be included, not just that arising in Spain. However, foreign tax credits may be used if the income has already been subjected to tax, avoiding double taxation - this means that you won’t end up paying twice!

 

 

Resident Tax in Spain

 

Under Spanish Law individuals are considered as resident for tax purposes if they spend more than 183 days in a calendar year in Spain or if the their business, professional or economic interests are based in Spain. Additionally, a presumption of residence arises if an individual’s family lives in Spain. These people are considered as resident for tax purposes, even if they have not obtained their residency permit.

 

For those with simple tax affairs, the most common way of completing the filing obligation, is to request a "BORRADOR" (draft) tax declaration. This is automatically generated by the tax office (AEAT) from their systems which contain details of employment, bank and other records, so they know what most people are due to pay. The draft return does not include any income that comes from outside of Spain i.e. your UK State Pension, Private Company Pensions, etc. If you have such income you cannot submit a Borrador because it would not be correct and you would be making a false declaration.

 

 

Who needs to file a tax return?

 

 

If you are resident (as described above), you will need to consider the following to determine if you need to file a tax return for 2014 here in Spain:

 

 

  • If you are in legal employment you will normally be paying the Spanish equivalent of PAYE. If your income is under €22,000 and from just one source you are not obliged to declare it but it may be advantageous to do so, as there may be allowances that you are entitled to claim.

  • If your income (such as from a pension) is less than €11,200 you do not need to declare it unless you have more than one source of income and the second and subsequent incomes exceed €1,500. Two pensions would count as two sources of income even though you add them together on your declaration.

  • If you have investment income of more than €1,600 you must declare it.

  • If your total income from all sources is less than €1,000 you do not need to declare it.

  • If you are self-employed or running a business you will have to make a declaration irrespective of what your level of income is.

 

Despite all the tax reporting requirements, Spain actually remains a tax efficient country for British expatriates. We recommend that you always take specialist advice and that a full review of your assets is carried out now to ensure that they are working for you in a tax efficient manner.

 

 

We here at Abad Abogados would welcome the opportunity of advising and assisting you in all your tax affairs – why not contact us now to make an appointment? 

 



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10 Comments


Robert Roxby said:
25 April 2015 @ 08:52

all my income comes from England after tax paid but some people I will be liable for inheritance tax is this right


Robert Roxby said:
25 April 2015 @ 08:53

all my income comes from England after tax paid but some people I will be liable for inheritance tax is this right


harddunby said:
25 April 2015 @ 09:40

Yes you will be. Regardless of paying UK tax you are often obliged to declare all your income in EU countries. I leave this to you as it will take over a year to refund dual paid tax. Basically it's a nightmare of burocracy as you know the locals are not playing to the rules, even the Royal Household in Spain. For anyone it's easy to spend your money but very complicated to extricate yourself from the system, which is why so many just shut the door and disappear.


Heather said:
25 April 2015 @ 09:55

I have been employed in spain since I moved here 4 years ago, I taught myself how to submit a return and have had a rebate every year...well worth doing if you are employed here and really easy to do online....it is one of the easiest things to do in Spain..REALLY it is


sally said:
25 April 2015 @ 10:02

Has it changed for non residents paying tax if they own property in Spain. I thought it had to be in by end of december 2015 for the 2014 year?


james said:
25 April 2015 @ 10:06

I have a private pension and a state pension both paid in the UK, the total amount is less than €22000 and I dont have any other income but I still pay a lot (in my opinion) of tax. Last year I paid €3300 the year before paid €2400. There seems to be no logic, just because I get my income from 2 sources. Is this correct? ANY help or advice would be welcome


derek sharples said:
03 May 2015 @ 21:03

Am I right if I suggest that james would be better off applying for Duel Taxation, then is state pension would be subject to the Spanish tax system, and is private pension taxed in the UK ; that is if james is tax resident in Spain ; He would have a UK tax allowance of £10660.00 and in Spain he would not pay tax on his state pension.

Derek


derek sharples said:
03 May 2015 @ 21:07

Read is as his in both cases in my first post


james said:
03 May 2015 @ 21:30

Hey Derek!
Thanks for that but need to know more as to what you mean. I thought I was registered for dual taxation. I am registered as tax resident in spain but am confused now. Any chance of chatting with you by some other means. If you dont mind giving me your phone number I can call you or by my e-mail jamesinspain10@gmail.com

Thankks again

James


AbadAbogados said:
05 May 2015 @ 22:54

Thank you for your comments!

Yes, you are correct, your assets or your residence in Spain obliges to present taxes in Spain.

The obligation to fill Income Taxes in Spain (IPRF) comes from your residence or not in Spain. If you lived in Spain in 2014 more than 183 days you are considered as a resident taxpayer in Spain.

Nevertheless, let us remark that the pensions that could be exempt are those that comes from the work carried in some Public Entities on your Country.

The private pensions must be taxed in Spain and you should be communicating to your county that you are paying taxes here. Of course the Double Taxation Agreement must by dully checked to know the adequate taxation and look for the best tax efficient options.

In this case, let us add that the deadinle to submit the Tax is on 30th June 2015.

Of course as soon as you become tax resident in Spain you have to contact the Inland Revenue to communicate your new tax residence and avoid duplicities.

On the other hand, if you did not live in Spain more than 183 days, and you own a property in Spain, you would have to submit Non Resident Tax, but this will be object of other articles...

Best Regards,



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