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Exemption from filing an annual income tax declaration.

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Unlike some other countries, individuals who live in Spain are always required to file an annual income tax declaration, unless specifically exempted.

The Spanish tax year is the calendar year and the filing deadline runs between 1 April and 30 June.

However, individuals or couples are exempt from the filing obligation in the situations described below. The rules are complex and a little confusing and in the case of doubt, just phone us to confirm:

A) In the case that total income is less than 22.000 euros for the year and is received from a single Spanish source (example: salary from Spanish employer).

This exemption also applies in the case that income is received from more than one Spanish source as long as the income from the second and other sources does not exceed 1.500 euros.

B) In the case that the total income is less than 14.000 euros and is received from a single, including when the source is non-Spanish.

This exemption also applies in the following cases:

  • The income is received from more than one source as long as the income from the second and other sources does not exceed 1.500 euros.
  • When the income is financial support from a spouse.
  • The income is taxed at source in Spain at fixed rates (directors fees, public speaking, authors, late paid salaries)

C) In the case of income from investments and capital gains that these do not exceed 1.600 euros in total, always that such income was taxed at source in Spain.

D) In the case that imputed income from second homes, untaxed Spanish Treasury Bonds, capital grants from public sources, do not exceed the limit of 1.000 euros.

E) Regardless of all the above rules, no income tax filing is required if income or capital gains from whichever sources do not in total exceed 1.000 euros and capital losses from the disposal of assets do not exceed 500 euros.

It should also be said that for a foreigner it can be desirable to file an income tax declaration, even if not strictly required because:

  • In the case of having a 5 year temporary TIE or residencia, the zero tax declaration provides useful proof of a) compliance with tax rules and b) presence in Spain for more than 6 months each year. Such proof may be needed to renew residency rights under the Non Lucrative Visa rules.
  • In the case of selling a home it provides strong proof of your home address and tax residence, to support claims for capital gains tax exemptions for those over 65 and, for those below 65, capital gains rollover relief when buying a new home.

Typical Q and As

Q: Karl receives a pension of 13.000 euros a year from the social security system of Germany. He has savings in a Spanish bank deposit account which pays him a further 1.000 euros a year.

A: Under rule B) Karl does not have to file a tax declaration but should do because the Spanish bank has withheld tax at 19% of over 200 euros which he will only get back if he files a tax declaration.

Q: Rose received a salary of 15.000 euros from one temporary job where she worked for 7 months and then another 1.200 euros from another job where she worked for 1 month.

A: Rose does not have to file a tax declaration under rule A) but, just like Karl, she should do so because she has almost certainly paid some tax via the deductions her two employers had to make from her salary

Q: John receives a UK pension of 9.500 euros and has a property in the UK that produces 4.000 euros net income.

A: Although John’s income is below the 14.000 euros he is not exempted under rule B) because he has property income which cancels all exemptions.

Q. Michelle lives in Spain but works for a UK company receiving a salary of 21.000 euros.

A. Michelle is not exempt under rule A) because the 22.000 euro limit only applies if the salary is received from a Spanish employer.

Q. Tom was working as self employed for January and February 2020 and had income of 800€ and then he stopped work altogether because of ill health. He had no other income and lived from savings.

A. As explained in rule E) he does not have to file a tax declaration because his income was below 1.000 euros.

If in doubt as to whether you have to file a tax declaration you can call us on +34 95 282 29 43. We answer questions like this for free.

Spence Clarke & Co specialises in the provision of Spanish tax, legal, audit and accountancy services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.