Income Tax / Renta (Modelo 100)

Income tax in Spain, known as IRPF, is a progressive tax levied on various income sources. Taxpayers must declare their worldwide income annually, with rates ranging from 19% to 47%, and timely submission of accurate information is crucial to avoid penalties.

Introduction

Navigating the intricacies of income tax in Spain is essential for residents. From salaries to investments, various sources contribute to your taxable income. Let’s delve into the key aspects of Spain’s Personal Income Tax (IRPF) system, exploring its categories, tax rates, obligations, and deadlines.


What is income tax?

Personal Income Tax or Impuesto de Renta de Personas Físicas (IRPF) is a tax to be paid by all physical residents in Spain on their income. Income is to be understood as salaries earned as an employee, income generated as a freelance professional, pensions, interest income on accounts, bonds or deposits, rent, profits generated by real estate or stock transactions etc. There are basically four categories of income to be distinguished:

  • Rendimientos de Trabajo: Income earned as an employee for a company, both primary and secondary benefits
  • Rendimientos de Capital Mobiliario: Income derived from investments in financial or monetary assests
  • Rendimientos de Capital Inmobiliario: Income derived from the ownership of tangible assets like real estate
  • Rendimientos de Actividades Económicas: Income generated by a freelance business activity

As a fiscal resident in Spain, your worldwide income has to be declared in Spain, even if you already pay taxes on income you generate in other countries. Generally, double taxation is avoided by tax agreements between nations, but this needs to be checked, verified and reflected in your tax declaration.

The IRPF is a direct and progressive tax, meaning that you pay a higher percentage if you have a higher income. This system is established by a scale system, taxing higher brackets with higher rates, but only that bracket and not the entire income. On a national base, the following six scales are configured as follows:

  • Until €12.450 the tax rate is 19%.
  • From €12.450 to €20.200 the tax rate is 24%
  • From €20.200 to €35.200 the tax rate is 30%.
  • From €35.200 to €60.000 the tax rate is 37%
  • From €60.000 to €300.000 the tax rate is 45%
  • Above €300.000 the tax rate is 47%.

 

Apart from these state rates, the Spanish autonomous regions have the right to apply an autonomous regional income tax on top, that may modify the brackets and increase or decrease the rates to be applied. It is for this reason that you may be paying significantly more or less depending on the region you live in, with the total maximum rate fluctuating between 45,5% in Madrid to 54% in Valencia.

Furthermore, a tax free base of €5.550 is to be considered, depending on your personal circumstances, thus reducing your taxable base accordingly.

For financial income derived from capital, savings, investments, dividends and similar, including investments in crypto currencies, a different scale applies:

  • Until €6.000 the tax rates is 19%
  • From €6.000 to €50.000 the tax rate is 21%
  • From €50.000 to €200.000 the tax rate is 23%
  • From €200.000 to €300.000 the tax rate is 27%
  • Above €300.000 the tax rates is 28%

Part of your personal income tax obligations are automatically paid during the year, for example in IRPF retentions in your payslip, retentions in your sales invoices if you are a professional or through quarterly tax declarations 130 and 131 for freelancers. These “advance payments” will be taken into account when presenting your annual tax declaration.


Who must declare income tax?

As mentioned, as a general rule, all residents in Spain must present an income tax declaration, even if you are a non resident from a fiscal point of view or if you benefit from the Beckham or 7p exemptions. However, there are a number of exceptions:

  • You have worked for one Spanish company and your gross annual income is less than 22.000 euros and you did not receive an income abroad.
  • You have worked for different Spanish employers or you received an income or benefits abroad, but your gross annual income is less than 15.000 euros
  • In the situations above, you must submit a tax return if your income out of savings, investments or insurances is higher than 1.000 euros
  • In special situations or in doubt, we advise you to consult your personal situation with our tax advisors

When to prepare and present your income tax declaration?

The annual campaign starts in April and ends in June. The Tax Agency will send you a draft (borrador) of your tax declaration that you can easily approve and forget about it. We do not recommend to do this since the data is often wrong or not complete and might not take into account your current personal circumstances. Your obligations are usally correctly reflected in the draft, but deductions and alternative types of presentations that might be of your benefit are not proactively included.

The deadline for presenting your income tax declaration is the 30th of June of the following fiscal year, but as there is a lot of documentation to be gathered, checked and analyzed, timely submission of information to your accountant is important. In general, you should deliver all required information by the beginning of May in order to be assured of a comprehensive declaration and to avoid suboptimal or erroneous declarations and charges for extra work.


What documentation should I prepare?

A. Copy declarations

  • Copy draft declaration (“borrador”) or other tax information, if applicable, obtained from the Spanish tax authorities.
  • Copy last year’s tax return if this wasn’t done by us.

B. Work, pension and benefits

  • Annual statement of your employer or benefits agency which states your salary, pension or other benefits, withholdings and deductions.
  • In case you paid social contributions abroad, we’ll need an overview.

C. Property

  • Ownership: payment receipt of the property tax (IBI) and cadastral information of your home and other real estate in Spain and the purchase price of property abroad.
  • Rental: rental income (also for real estate abroad) and the costs incurred. Please specify the use (residental, other).
  • Mortgage: an annual statement from your bank with repayment and interest information.
  • Sale/purchase/donation: information regarding prices and incurred costs.
  • Rent deduction: rental contract in Spain (in some cases a rent deduction is possible, we will examine this possibility), cadastral information of the property and NIF/DNI of the landlord.

D. Savings, investments, insurances, etc.

  • Financial overview of your bank accounts in Spain and abroad (interest revenue, also from children living at home without obligation to declare).
  • Overview contributions to pension, invalidity or life insurance. Contributions to foreign insurance are only deductible if it complies with the European Directive 2003/41/CE (please provide us with certificates of the bank or insurance company).
  • Information about received dividends, interest, income from bonds, etc.
  • Information about possession, purchase or sale of stocks, options, etc. (even if they are not listed).

E. Other

  • Certificates gained cash prices (lotteries and alike).
  • Overview payments made by (Spanish) insurance companies.
  • Overview of deposits on special home acquisition or company savings accounts.
  • Certificates of donations.
  • Overview of possible public benefits for maternity.

F. Personal Information and Documentation

  • Identity documents and NIE numbers: copy of your (valid) ID, and those of your spouse and children. And for everyone older than 14 years a residence card with NIE number.
  • Children living at home: please specify the number of children under 25 years old, living at home unmarried, with an income less than 8.000 euros.
  • Income partner: if your partner has an income, we would like to receive this information. We will study which declaration (individually or joint) is the most favourable. Observation: a joint declaration in Spain is only possible if you are married. In case of cohabitation a joint return is not (yet) possible.
  • Bank account. If we do not have your current details and only a wrong (old) bank account number, then this can lead to tedious and delaying consequences. Therefore, we would like to have your current bank details for the payment or refund of taxes.

Can you please do this for me?

Certainly, but please take into account the below indications:

  • Let us know if want us to do your income tax declaration as soon as possible. We have a limited capacity and will accept clients in chronological order. Our recurring clients will have priority.
  • Method of delivery: Please provide us with copies of all the relevant documents organized as effectively as possible and according to the codification of the items contained in this document. All amounts need to be provided in euro.
  • Deadline: We need to receive your information before 1st of May. Given that collecting (and possible translation) of documentation is time consuming, we kindly request to comply with this apparently early deadline.
  • Liability: We will prepare your tax declaration based on the information you have provided us with. You are therefore responsible for providing us with correct and complete information. We do not accept any liability due to inaccurate, unclear and incomplete information.
  • Responsibility: If we prepare your income and/or wealth tax declaration, this does NOT imply that we will notify or prepare any other possible tax declarations (such as for example the property tax IBI). We will do our best to inform you, but we may not have all the background information required. You are therfore responsible for your tax fillings and payments unless you have specifically contracted our services for each.
  • Tax correspondence address in Spain: It is of importance that you have a correspondence address in Spain. The Spanish Tax Authorities may proceed to check of the validity of the data of the tax return and failure to provide a timely reply may lead to a unilateral correction of the declaration accompanied with fines or sanctions. We offer the possibility to use our address as a correspondence address in case of need. For more information, please contact us.
  • Payment: In June we will inform you about the amount to be paid to the Spanish tax authorities. You will have to make sure that on the 30st June the balance of your bank account is sufficient to pay this amount and that the account is configured correctly for direct debits from the tax authorities in order to avoid possible fines.
  • Terms and conditions: On our services general conditions apply, such as payment terms and limitation of liability to the amount covered by our insurance policy.

Fees and conditions

Included: Supplying information about the required data, organize the information, preparing the declaration based on this information, and submitting the declaration.

Not included: Additional activities or services due to tax inspections or following requests for additional studies or information. Third party costs (courier services, the cadastral service, sworn translations) will be reinvoiced. Fees exclude VAT.

1. Basic €195

  • In case you only have salary, pension, interest and possibly rental income in Spain, the Netherlands or Belgium.
  • Rate only applicable in case information has been provided through clear overviews of if we already have it on file.
  • This minimum rate is also applicable for checking the draft (“borrador”) sent by the Spanish tax office.
  • Not applicable in case you have an investment portfolio.

 

2. Extended €265

  • In case you (also) have investments in stocks, bonds, etc.
  • In case you have bank accounts with special tax arrangements.
  • In case you bought or sold property.
  • Rate only applicable in case information has been provided through clear overviews of if we already have it on file.

 

3. Complex €125 / hour

  • In case you have extended investment or property portfolios or if special or not before mentioned aspects are applicable. This will be notified in advance, there will be no surprises.
  • Also applicable if no clear overview overviews are provided or if the information is provided late.

 

4. Additional work (If applicable) €65

  • When requesting NRC (Número de Referencia Completo) via bank branch by Accompany.
  • When requesting payment deferral and/or payment terms from the Spanish tax office.
  • Also applicable if the amounts are not provided in euros.

Sign me up!

By submitting this form you will be placed on the list of applicants in chronological order. Our capacities are limited and inscription is no guarantee for admission. We will confirm admission of your request before the process starts.

Once you have confirmed acceptance of fees and conditions, and we have received your payment, we will process your declaration.

info

The information contained herein is of a general nature, and subject to changes. Applicability to your specific situation should be determined through consultation with our tax or legal advisors.