As you already know, Spanish Tax Season starts on April 1st.
We know that being abroad is not always easy regarding the tax obligations. However, we are going to help you to understand if you have the obligation of filing in a tax return, and what do you have to include on it.
WHO HAS TO FILE IN A TAX RETURN?
This tax season is for Spanish Tax Residents. How do you know if you are a Spanish Tax Resident? If you have been in 2019 more than half of the year physically in Spain, there is a good chance that you are a Spanish Tax Resident. Even the sporadic absences (holidays or work travel) will have to be considered to reach the 183 days.
WHAT HAS TO BE INCLUDED IN THIS TAX RETURN?
Spanish Tax Residents must pay taxes on their worldwide income. This includes, among other:
- Salaries paid from companies.
- Annuities from pension plans.
- Income you perceive as a freelancer.
- Rental income from your properties. Even if you are not renting the property, if you have it, and is not your habitual residency, you will be presumed to perceive an income.
- Interests from any bank account you.
- Dividends from shares or investment funds.
- Capital gains on the sale of all your goods, wherever they are located.
MY EMPLOYER ALREADY WITHHOLDS ME IN MY PAYSLIPS. DO I HAVE TO FILE IN A TAX RETURN?
You will only not have the obligation to file in a tax return if the only income you perceive is salary and you only have one employer and you have perceived less than 22.000 Euros in the year. If you have had more than one employer, you will not have the obligation only in case the adding of the salary perceived from all of your employers, excluding the employer that most has paid you, is less than 1.500 Euros.
DO I HAVE TO FILE IN A TAX RETURN IF I DO NOT HAVE THE EMPADRONAMIENTO IN SPAIN? AND IF I DO NOT HAVE MY RESIDENCE PERMIT YET?
Yes. Remember that you will be considered as a Tax Resident based on the number of days that you are physically in Spain during the year. Besides, your Tax Residency status is independent from your VISA status.
I LIVE IN SPAIN, BUT I WORK REMOTELLY FOR A FOREIGN COMPANY, THAT PAYS ME IN A FOREIGN BANK ACCOUNT. DO I HAVE TO INCLUDE THAT IN MY TAX RETURN?
Correct. Remember that, as a Spanish Tax Resident, you have to pay taxes on your world-wide income. This means that, even if your salary is paid abroad, it has to me included in your Spanish Tax Return.
MY EMPLOYER ALSO PROVIDES ME WITH AN APPARTMENT AND SOME BENEFITS AS AN INSURANCE AND A GYM PASS. IS THIS TAXED TOO?
Yes, it is. This income is considered as benefit in kind. As such, it will be considered as employment income and will be taxed according to the value it has. I.e., the rent on the apartment, the price of the gym pass or the insurance paid (although the insurance is exempt from taxation up to a 500 Euros threshold).
I AM RETIRED IN SPAIN, AND MY ONLY INCOME IS PENSION PLAN ANNUITIES OR SOCIAL SECURITY PENSIONS I RECEIVE FROM MY HOME COUNTRY. ARE SUCH ANNUITIES TAXED IN SPAIN?
It depends. Annuities are considered an employment income.
When such pensions correspond to your work as a public servant to your home country, and now you are perceiving Social Security pensions because of your work as such, usually, those pensions are not taxed in Spain.
When these pensions are related to a private work in your home country, such pensions will have to be taxed in Spain.
ALSO, I AM TAXED IN MY HOME COUNTRY ON THESE ANNUITIES. AM I GOING TO PAY TAXES TWICE ON THE SAME INCOME?
Of course, not. Very probably, Spain and your home country have signed a double tax treaty to avoid double taxation. The most usual scenario is that you will be able to deduct in your Spanish Personal Income Tax the amount of taxes you have paid abroad.
AS A CONSULTANT, BASED IN SPAIN, WHOS PROVIDES ONLINE SERVICES TO FOREIGN CLIENTS, DO I HAVE TO PAY TAXES ON THIS INCOME IN SPAIN?
As a Consultant that is a Spanish Tax Resident, you should be registered as an Autónomo. Autónomos must too pay taxes on their worldwide income, that they obtain on their consultancy services., independently on where they provide them.
I AM UNDER THE BECKHAM LAW SCHEME. DO I HAVE TO FILE IN A PERSONAL INCOME TAX?
Yes, you do. Although it is not the same Tax Return. Your will be a Form 151. The term for filing it is the same that for the Personal Income Tax Return. Remember you will only be taxed on your worldwide employment income and on your Spanish-sourced other kind of income.
ARE THERE ANY PERSONAL ALLOWANCES?
Yes, they are. The personal allowance is of 5.550 Euros. If you are over 65 it increases in 1.150 Euros, and it will increase in 1.400 Euros if you are over 75 years old.
Also, if you have dependents who are younger than 25 years old, do not make over 8.000 Euros and live with you, you will be have 2.400 Euros allowance on the first, 2.700 Euros on the second, 4.000 Euros on the third and 4.500 Euros on the following ones. If any of them is less than 3 years old on the 31st of December, there is an additional allowance of 2.800 Euros.
CAN WE FILE A JOINT TAX RETURN? OR DOES IT HAVE TO BE TWO INDIVIDUAL TAX RETURNS?
In Spain there is the possibility that members of a family unit can file a joint Tax Return. A family unit consists in a married couple (with or without children), and in unmarried couples with common children. However, in the last case, the family unit consists only of one parent and the child (or children).
Joint Tax Returns do have an additional reduction of 3.400 Euros.
UNTIL WHEN DO I HAVE TO FILE IN THE TAX RETURN?
The Personal Income Tax Return for 2019 must be submitted by 30th of June at the latest.
If your Tax Return results into an amount to be paid and you want the amount to be direct debited to your bank account on June 30th, you must submit the declaration by 25th of June 2020 at the latest.
It is possible to divide the payment into 2 installments (without interests), the first payment is then normally 60% on the 30th of June and the second payment is 40% on the 5th of November 2020.
We are international lawyers experts in the subjection to taxes in Spain. At Lexidy Law Boutique, our experts will be glad to assist you in al your Spanish Tax regarding needs.