How to do your tax declaration in Spain

Lots of European countries have tax systems in place that calculate your annual taxes paid and automatically work out if you owe the authorities more or are due a tax rebate. Handy, right? Unfortunately this isn’t the case in the lovely country we’ve chosen as our expat home: Spain. The Declaración de la Renta (Tax Declaration/Return) is obligatory for Spanish residents who own assets and/or worked, whether employed or self-employed, at any stage the year before. The bad news is that the process is notoriously and unnecessarily complicated; the good news, however, is that we’re here to offer some tips and guidance to lend a helping hand.

Unlike other EU countries where there’s a lot of confusion about when the tax year starts and finishes, the Spanish tax year runs from 1st January until 31st December. At least this part is simple, right? Each of the 17 autonomous regions of Spain are responsible for setting their own tax rates, so it is advisable to check out your region’s individual guidelines in this regard. Don’t forget that this fiscal devolution in Spain encompasses:

• Direct Taxation (applied to income and assets): Personal Income Tax, Corporate Tax, Inheritance and Donations Tax, and Wealth Tax
• Indirect Taxation (applied to goods and services): VAT, Insurance Premium Tax, Wealth Transfer tax.

To get a general idea of the variation of taxes in Spain depending on the autonomous region, check out this article written in 2017 for the economy section of general daily ABC.

Do I have to file a Tax Declaration in Spain?

Spanish law states that you must file a tax return if you fall under any of the following categories:

• You are self-employed or have your own business
• You obtain annual income from employment
• You obtain rental income
• You have capital gains and savings (pensioners are included too)
• You own property

There are, however, certain exceptions to these rules: e.g. if you’re employed but earn under the threshold (€22,000/year), you are not required to submit your tax return.

When do I have to file my Tax Declaration?

The period for submitting the tax return in Spain normally runs from 1st April until 30th June. Income tax is paid in arrears, which essentially means that you declare your income for the year before in the current period. Heads up, be as prepared as you can and abide by the deadline, as late returns are subject to fines from the Tax Authorities.

What help is available?

If you’ve ever done your tax return in Spain, or even if you’re a first-timer trying to navigate the Modelo 100 (the standard tax declaration form for Personal Income Tax (IRPF)), you’ll be well aware that it is a minefield in itself, but don’t worry, there are certain tools on hand to guide you along the way. The Agencia Tributaria is also all aware of the pitfalls a complicated system entail, so they have created PADRE - the Personal Income Tax Return Support Programme that is installed at tax offices to guide taxpayers through the process. It essentially incorporates data and produces the “borrador” (draft), allowing you to modify details and repeat the process before submitting the return.

Another common resource used by many Spaniards and expats alike is a gestor, a sort of financial advisor if you will, who takes care of all the formalities from start to finish, meaning all you need to do is supply him or her with the necessary information, and voilà. Check out this directory of administrative advisors across the country to find one that meets your needs.

Don’t forget that new rules are implemented almost every year, so it’s important to be well clued up on what you are eligible for, whether this involves a tax deduction for maternity leave, or exemption due to not meeting the minimum income requirement. Visit the Agencia Tributaria website or call (+34) 901 335 533 or 91 554 87 70 Monday to Friday from 9am to 7pm for general information on the tax declaration.

Good luck and “que te toque a devolver” (let’s hope you get a tax rebate).