Income tax returns – calling all Spanish tax residents
On Tuesday 3rd April, the 2023 income tax period started, in which all Spanish resident tax payers will have to declare their worldwide income obtained from 1st January to 31st December 2023. Taxpayers are obliged to file a tax return before 1 July 2024 which is the deadline for filing.
The Spanish tax office had a bumper year last year which saw the tax income increase by 10% as a result of more people being employed and salaries increasing. From 3 April onwards more then 23 million tax payers will have to start the tax return process. For those who are big savers it will be an opportunity to see the effect of increased taxation on their savings and for those who earn less than 21,000 euros the moment to see if the promised tax saving of up to 516 euros results in a genuine saving.
How does this affect you?
For those residents who last year sold a property or rented one out, they will include these transactions in their tax returns. If you sold a property as a resident and reinvested all those monies in a new property as a main residence, then there will be no tax due. However if you did not reinvest those monies in a period of 2 years then you could be subject to tax on the gains. There is a sliding scale of tax on the profits from the sale starting at 19% for gains up to 6000 euros, 21% on gains of between 6000 and 50,000 euros, 23% on gains of between 50,000 euros and 200,000 euros, 27% between 200,000 and 300,000 euros and 28% over 300,000 euros.
Of course expenses directly related to the purchase and sale of the property can be used to reduce the profit made and therefore pay less tax. The most important expenses to take into account are: Real Estate Agents fees, Legal fees, Notary fees, Land Registry fees, Taxes and Improvement works carried out on the property. Improvements must be works that improve or extend the property. Repairs and conservation work (painting), or the purchase of furniture/white goods, do not count.
What do you need to do?
We would recommend that any taxpayer wishing to make use of these deductions should keep the invoices for these expenses and proof of payment in case the taxman requests sight of these.
Due to your family situation, you may obtain tax benefits that you are not aware of, so we would recommend that you provide all the information you have to your tax advisor when you start to prepare your tax return.
At My Lawyer in Spain we have a team of specialist tax advisers for Spanish tax residents. If you would like assistance with your tax return contact us on 951203094 or by email to enquiries@mylawyerinspain.com
