Digital Nomad Tax

Income Tax Return in Spain: Key Aspects and Saving Strategies

If you live in Spain, regardless of your nationality, it is likely that you will have to file your annual income tax return in Spain.

In this comprehensive guide, we will explain the process, the amount to pay or receive, the payment methods, and the deductions and allowances that can help you save money.

In addition, we will provide valuable tips to facilitate this procedure.

income tax return spain

1. What is the income tax return in Spain?

You need to file a tax return in Spain to provide an overview of all of your income for the year.

The income year in Spain follows the calendar year. Thus, you normally include all of the income you made during a specific year.

This can be income which originates from Spain. But also income from outside of Spain.

1.1 Will I have to pay taxes?

Filing a tax return does not necessarily mean paying additional taxes.

During the year, the corresponding taxes are already withheld from your salary.

For example, self-employed individuals in Spain have to make quarterly payments on account for the Personal Income Tax (IRPF).

The declaration verifies if you have overpaid or owe more, allowing the Administration to refund or collect the difference.

1.2 What factors affect my income tax return in Spain?

Your situation has a significant influence on your tax return.

Factors such as age, marital status, housing, disability, and home ownership, among others, determine the deductions and allowances available.

2. How to know if you are required to file a tax return in Spain?

Determining whether you are obliged to file a tax return depends mostly on your tax residence in Spain.

If you meet certain criteria, such as living more than 183 days a year in the country, having your main economic activity in Spain, or having a resident spouse or dependent children.

All of this could make that the Spanish Tax Authorities consider you a tax resident.

Consequently, you will owe taxes in Spain.

3. When do I file my income tax return in Spain?

As discussed previously, the tax period in Spain runs from January to December.

You will need to file your tax return between April 1 and June 30 of the following year.

Failure to comply with these deadlines may result in penalties. Therefore, it is essential to file the tax return on time.

4. How do you present your declaration?

The filing of the income tax return is done online.

You must request a draft through the Tax Agency platform and submit the necessary documentation.

Payments or refunds are made by direct debit.

5. Tax rates: find out exactly how much you should pay

The amount you will have to pay is determined by the income from work, capital from real estate, and wealth gains.

These rates are progressive and are divided between federal and local taxes.

6. What deductions can be taken from the income tax payment?

Deductions such as pension plans, mortgage or housing rental expenses, donations to solidarity entities, and autonomic deductions can reduce your taxable base. Thus, reducing the amount to be paid.

7. Additional strategies to save money

Take advantage of double taxation agreements between Spain and your home country to avoid double payments.

Explore the Beckham Law if you qualify, and consider additional deductions specific to your region.

In summary, filing income tax returns in Spain is a complex but essential process.

Seeking advice from tax experts will allow you to optimize your situation and maximize the tax benefits available, do not hesitate to contact me for personalized advice to ensure a smooth process!

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