Tax in Spain: Tips to file the income tax  and wealth tax in Spain efficiently

Tax in Spain: It´s again time to file your Income Tax and Wealth tax in Spain. The fiscal advisors and accountants of our multilingual Spanish law firm in Marbella have the pleasure to analyse some recommendations in order to file the income and wealth tax refund in an efficient way.

1) Before granting the corresponding Spanish Income Tax and wealth tax, we must compile all necessary documents as well as the fiscal information from the tax office ( Inland Revenue in Spain).

2) It is relevant to have available the corresponding tax declaration of the previous years in order to recall if there was any outstanding sum to be compensated.

3) Special attention must be given to related party transactions, for example in the case of transactions related to participants, shareholders or directors of a company. These transactions must be assessed at market price.

4) We must recall to include the information of your income obtained outside of Spain as well as to obtain the assessments of real estate and rights situated outside Spain. The latter is applicable for the wealth tax, if there is any, or must be included in the form 720.

5) If you are the owner of a property in Spain, you must pay special attention to the fact that the deduction for investment in family dwellings has been eliminated. See one of our previous articles.

6) If you are the owner of a property that you are renting out, we wish to warn you that this type of income will be much more controlled by the Tax Office as from now onwards due to the information provided by the electricity companies and the cadastre references the tax office will have in their custody.

7) If you carry out economic activities, the following information is important with regard to the Spanish income tax declaration (IRPF):

a) A 20% reduction on the net-income if you are a new entrepreneur.

b) Deduction of 10 or 5% of the fee you need to pay as self-employed on the tax base corresponding to profits obtained in the activity, provided that we have invested them in tangible fixed assets or real property.

If you have to file your wealth tax declaration in Spain, we must foresee that said tax declaration may only be filed on-line. IRPF income tax in Spain may in such case also only by filed through internet. Therefore we need to dispose of an electronic certificate.

If you file the IRPF Spanish income tax declaration, you can best do so before the 30^th June. Should you file your refund too late, a surcharge of 5% on the difference will be charged if such is filed within three months after the 30^th June, 10% in case of a six- months delay and 15% if between six and twelve-months delay. After this period, a surcharge of 20% will be applied. As from the 1^st July 2015, late payment interests will have to be paid.

Previous articles under the subject “Spanish Taxes” can be found here.

Do not hesitate to contact one of the efficient English speaking accountants and tax advisers of our firm for any clarification or additional information.

María Teresa Arcos, Lawyer in Marbella

Wim Lamers, Accountant (economista) in Marbella.