What is personal income tax?

Personal Income Tax (IRPF) is a tax that forms part of the tax system in Spain. It is a direct and progressive tax that is levied on the income earned by individuals during a tax year. It is one of the main sources of revenue for the State and its collection contributes to financing public expenditure and services that benefit all citizens.

Personal Income Tax Tips

1. Knowing the different sources of incomeIt is essential to take into account all sources of income that must be declared in the IRPF, such as salaries, pensions, rents, bank interest and capital gains. Make sure you include all these items in your tax return to avoid problems with the tax authorities.
2. Deductions and allowancesThe IRPF allows the application of a series of deductions and allowances that can reduce the amount to be paid. Some examples include deductions for large families, for disability, for renting a permanent home, among others. Find out which deductions apply to your situation and don't forget to include them in your tax return.
3. Tax planningIt is important to carry out proper tax planning to optimise your personal income tax payments. Some strategies may include splitting certain income, making tax-advantaged investments, or anticipating deductible expenses before the end of the tax year.
4. Saving and organising documentsKeep all the relevant documentation organised for your personal income tax return. From pay slips and withholding certificates to proof of deductions and allowances. Good organisation will make it easier to prepare your tax return and avoid errors.

What to bear in mind about personal income tax

1. Mandatory annual declaration: All individuals resident in Spain are obliged to file a personal income tax return if their income exceeds certain limits established by law. It is important to be aware of the deadlines to avoid possible penalties or surcharges.
2. Withholding taxes: In many cases, employers or payers make withholding taxes, i.e. direct deductions from income before it is paid to the employee or beneficiary. These withholdings are applied in order to anticipate the payment of the tax and to regularise it with the annual tax return.
3. Obligation to report changes: If there are significant changes in your personal or employment situation during the tax year, it is important to report them to the tax office so that they can be taken into account in your tax return.

Remember that proper compliance with your personal income tax obligations is essential to avoid legal problems and to contribute to the support of public services. If you have any doubts or need specific advice, it is always advisable to consult a tax expert.

At Atriun Asesores, we have a Fiscal, Commercial and Tax Law who will advise you on everything you need. Do not hesitate to contact us.