Spanish tax return or Spanish tax declaration are the forms that everyone who owns a property in Spain regardless of their nationality or residency situation must fill in and submit to the tax office. The tax return declaration in Spain is to assess your income and assets reviewing your financial situation to see if you are liable to pay any other taxes, not already paid throughout the year. So, in other words it’s a way of making sure that you have paid all your taxes correctly and do not owe any and are not owed a refund.
In the case that after calculating your tax returns you are found to be owing the tax office you then are given a period to pay willingly, which can also be split up into smaller payment if you like. Another situation is that after the assessment you are found to owe nothing meaning your taxes are in order, or the tax office has retained too much tax and you are to be refunded.
Tax returns in Spain are not meant to be scary, although if you don’t know how to do them, they can be overwhelming particularly if not done correctly. Spanish regulation states that all residents in Spain must not only submit their tax return forms, but must declare all of their income and assets including ones within and out Spain. This recent development in declaring everything is mostly for informational purposes, as the threshold for offshore income and assets is around the 600,000 Euros mark. This is the same for most incomes sourced from investments, like shares, a lot of it does not fall under the taxable percentage. However, not declaring it can lead to huge penalties and fines, as found with some people being fined up to 10,000 Euros for having assets worth over 50,000 Euros overseas and not declaring it.
In terms of general income such as pensions there is a large threshold of 22,000 Euros before you hit the high taxable percentages. This is the case with only one income, as soon as there are two incomes the threshold goes down to just over half. When it comes to those who work in Spain, they will usually have a small percentage of their salary retained for taxes, which they will then be assessed at the end of the tax year they will then be told if they were taxed correctly or not. There are also tax credit, for families with children and those with a mortgage, which is why some people may get refunded, because given their annual income less the taxes credits where applicable is under a certain threshold, therefore the taxable percentage goes down, which means that the original monthly retention was too high and is in part refunded.
When submitting your self -assessment tax return, you will have to do it on an individual basis, even though you may own a house with someone, like your partner, you both must submit your forms and be assessed separately.
ABADs accounting and legal team would be more than happy to be able to assist you with your taxes in Spain and help advice on any financial aspect or query you may have. We have a reliable team with the resources to fill in and submit your taxes making it hassle free for you.