Tuesday, 7th July 2020

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Your Tax Return in a nutshell

Your Tax Return in a nutshell

All tax residents who have had an income of any sort during 2015 are obliged to submit a tax return or RENTA, with some exceptions.

The annual tax return must include all incomes of any sort in the following categories:

  1. Employment related revenues: Salaries, Wages, Pensions, Payments in Kind.
  2. Revenues from Real Estate.
  3. Revenues from Assets other than Real Estate.
  4. Revenues from Business Activities.
  5. Accrued Incomes (This is a kind of wealth tax).

Incomes from the above may be taxed at the Regular Tax Scale or the Saving Tax Scales depending on whether the time taken in generating the revenue was less or more than 2 years.
Example: You receive dividends from an investment in a fund for 5000€ after a period of maturity of 2 years. Provided that this is the only revenue under this category it will be taxed at 20% independently of your gross revenue under other concepts.

Double taxation agreements.
Income generated in other countries must also be declared. As long as there is an agreement between Spain and the other country, whatever tax was paid in the other country will be deducted from the tax liability in Spain to avoid double taxation.

The agreement covers all EU countries and a few others. Basically you report the foreign income but your tax bill in Spain will be reduced accordingly. General Tax Scale and Tax Scale for Savings. Different regional tax authorities within Spain have each their own tax scales, though there is little variation between them. Here is an approximate illustration of the scale:

Table 1. Tax Scale for General Incomes

0 17,707€ 24.75%
17,707€ 33,007€ 30%
33,007€ 53,407€ 40%
53,407€ 120,000€ 47%
120,000€ 175,000€ 49%
175,000€ 300,000€ 51%
300,000€ upwards 52%

Table 2. Tax Scale for Savings Income

0 6,000€ 20%
6,000 50,000€ 22%
50,000 UPWARDS 24%

While there is no need to submit documented proof of declared incomes, it is advisable to keep them handy in case they are asked for.


Not all tax allowances reflect the same way on the final tax figure. Some reduce the taxable amount and others will reduce the actual tax due at the time of the event.

The basic Tax Free Allowance per tax Payer, depending on personal circumstances:

Up to age 65 5,151
Over 65+ 6,069
Over 75+ 7,191
Disability allowance for
over 65
Disability allowance for
over 75

Amount per Child

First € 1,836.00
Second € 2,040.00
Third € 3,672.00
Fourth € 4,182.00
Any child under 3 will
increase allowance per 
€ 2,244.00

Additionally contribution to a private pension plan (with some limits) and to pensions for disabled family members are deductable. There is also a maternity allowance.

Final Figure. Payment or Rebate? As a business person, you are likely to have paid tax in advance (IRPF-deducted at source) so this is when your final tax bill is calculated taking your prepayments of tax into account and any overpayment of tax will be refunded.

On the other hand you may have exceeded your allowances and tax prepayments, in which case there will be a difference to pay.

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