Income tax – exemption from filing an annual income tax declaration.

Individuals who live in Spain are required to file an annual income tax declaration. The Spanish tax year is the calendar year and the filing deadline runs between 1 April and 30 June.

However, individuals are exempt from this obligation in the situations described in A), B) C) and D) below:

A) In the case that total earnings from Spanish employment do not exceed 22.000 euros if paid by a single Spanish employer. This exemption will also apply if there are several Spanish employers/sources and

  • total earned from the second and other employers does not exceed 1.500 euros.
  • total income from social security, insurance companies, pension schemes and other similar passive sources do not exceed 1.500 euros

B) In the case that earnings from employers (Spanish or otherwise), including pensions, that do not exceed 14.000 euros and

  • there is more than one source of earnings from employment and the second or other employers exceeds 1.500 euros.
  • income in the form of maintenance received from a spouse
  • the employer/payer is not subject to withholding Spanish income tax (PAYE). This includes pensions paid by non Spanish state systems and former non Spanish employers.
  • 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 do not exceed 1.600 euros, always that such income has taxed at source in Spain.

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

E) In no case will an income tax filing be 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.

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 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 because she has almost certainly paid more 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 2019 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.