Income tax of individuals (Spain)

Income tax of individuals (Spain)

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The Income Tax of Individuals or income tax, personal income tax is a progressive, direct and taxing the income earned in a calendar year by individuals resident in Spain. So is a tax figure belonging to the Spanish tax system.
In the contemporary tax jurisdictions, the income tax is the most significant pillar of the tax system. In the case of Spain, the income tax is no exception, is highly quantitative relevance and revenue. Both because of its importance as the mechanical precision that allows your tax, income tax clearly reflects the principles of justice and constitutional tax material, among which include the principle of progressivity, generality and economic capacity.
The tax is applicable regulations of Law 35/2006 of November 28, the Income Tax of Individuals and partial amendment of the laws of the Corporation Tax on Nonresident Income and Wealth, and related Regulations, approved by Royal Decree 439/2007, of 30 March, approving the Regulations on Income Tax of Individuals and amending Regulations and Pension Plans, approved by Royal Decree 304/2004, of 20 February.




Index
[Hide] 1 History
2 Nature of the tax
3 Legal regulation 3.1 Taxable
3.2.1 Criteria 3.2 Taxable General Criterion 3.2.1.1 residence
3.2.1.2 Criteria of economic interests
Criterion 3.2.1.3 vital interests
3.2.1.4 Regime impatriates
3.2.2 income allocation scheme
3.3 Exemptions 3.3.1 Compensation because of liability for personal injury
3.3.2 Termination or Termination of Employment
3.3.3 Social Security Benefits disability
3.3.4 literary awards, artistic and relevant scientific
3.3.5 Awards and betting sweepstakes
3.3.6 Income from employment abroad
3.4 Base Salary income tax 3.4.1 3.4.1.1 Assumptions
3.4.1.2 Benefits
3.4.1.3 Income from work assimilated
3.4.1.4 Income in kind
3.4.1.5 Irregular income
Deductible expenses 3.4.1.6
3.4.1.7 General reduction
3.4.1.8 Settlement Scheme
3.4.2 3.4.2.1 Investment income Share in equity of entities
3.4.2.2 Transfer of funds to third
3.4.2.3 Operations and contracts funded life insurance and disability
3.4.2.4 Other return on investments
3.4.2.5 Yields integrity
3.4.2.6 Irregular income
Deductible expenses 3.4.2.7
3.4.3 3.4.3.1 Income from real estate yields intact
3.4.3.2 Irregular income
Deductible expenses 3.4.3.3
Reductions 3.4.3.4 Housing Assignment
Returns 3.4.3.5 if kinship
3.4.4 Income from business activities 3.4.4.1 Direct Estimate
3.4.4.2 Simplified Direct Estimation
3.4.4.3 Determination of net income
3.4.4.4 Objective Estimation

3.5 Capital Gains and Losses
4 Basics 4.1 Types of taxation
5 Income Tax Management Agency in Spain
6 Collection of income tax in Spain
7 References
8 External links

[Edit] History
The tax reform of 1845 was the first step in the modernization of the state apparatus. Later Raimundo Fernández Villaverde reform in 1900 resulted in the creation of Tax on Profits of Wealth, the predecessor of the income tax. There were several reforms between 40 and 50. The reform of the central state in a decentralized state in the 90s resulted in more changes. More recently, the 2007 reform continued the process of decentralization, giving more resources to the regions.
[Edit] Nature of the tax
The personal income tax is a direct nature, personal, subjective, progressive, and analytical newspaper. Is direct or gravel rests directly because the person, personal, because it is set on the person and not on the good; subjective, because it takes into account the physical condition of the person; progressive, in that a higher tax is taxed in greater proportion; newspaper taxed because every so often, namely every year; analytical, in that the different components of the taxable income or are integrated into the tax base differently on account of their origin. He is currently assigned partially autonomous communities.
[Edit] Legal regulation
[Edit] Taxable
The income tax taxable income is obtaining by an individual resident in Spain in the course of a particular tax period. Its legal regulation is in Article 6 of Law 35/2006, where the legislator provides sources of income as earned income, capital and economic activities, as well as gains and losses and income allocations that if required by law. The revenues that are subject to inheritance and gift tax are not subject to income tax, as stated in Article 6.4.
Article 6.5 establishes a rebuttable presumption, which are considered benefits paid goods, rights or services capable of generating employment income or capital. They are therefore assumptions of taxable transactions. The most common examples are borrowing money or transfers of property made use of family links where the law presumes that the lender or assignor obtains an income equivalent to that charged to a stranger. Such presumptive income may not be counted in income tax if the taxpayer proves the gratuity for services provided (usually by notarial deed).
Regarding the aforementioned income allocations, the law creates a legal fiction that gained reputation as rents have not really been received by the taxpayer. Such a situation can occur in a number of closed cases provided by law, specifically the following:
Imputed property income (2% of assessed value) (the 1.1% if the property value has been revised by the Treasury)
Revenue in international tax transparency regime.
Income from assignment of image rights.
Income received by partners or participants in collective investment institutions incorporated in countries or territories considered tax havens.
[Edit] Taxpayer
The taxpayer or the taxpayer's income tax, as stated in Article 8 of Law 35/2006, are individuals who are ordinarily resident in Spanish territory and also having their habitual residence abroad for some of the circumstances listed in Article 10, ie diplomatic mission, consular offices and institutes abroad. Article 9 tries to cover as many people as Spanish residents. This is shown in the three criteria on which to be resident.
[Edit] Criteria of residence
[Edit] General criterion
The general approach is physical permanence in Spain for more than 183 days in a calendar year. Not taken into account temporary absences outside the national territory. For lack outside Spain have efficacy, the taxpayer must act providing a certificate of residence elsewhere. For example, if a person goes on holiday to Norway and decides to stay, it is still taxpayer in Spain.
You have to prove to the Spanish Treasury, by any legal means, which has resided more than 6 months and one day out of Spain. Not be effective any certificate issued by any tax haven. (Ni in the year of supposed change of residence or in the four subsequent).
Once proven the residence outside Spain for more than six months and one day, on the assumption that the new place of residence is a tax haven, tax quarantine exists, ie a period of four years (plus one in which proven) during which you will be taxed as a resident in Spain. The tax haven level does not sign an agreement to exchange tax information or an agreement to avoid double taxation information exchange clause. Until 2010, Spain has signed agreements to avoid double taxation (with information exchange clause) with the following countries or territories: Malta (08/11/2005 agreement, entered into force on 12/09/2006), United Arab States (Convention 05.03.2006, entry into force 02.04.2007) Jamaica (Convention 08.07.2008, entry into force 16/05/2009), Trinidad and Tobago (17/02/2009 Convention, entered into force 28/12/2009) and Luxembourg (Protocol to the 10/11/2009, entry into force 16/07/2010). Currently (2011) are pending the respective agreements with Barbados, Panama, and was signed in April 2011, the agreement with Singapore that went into effect on January 2, 2012.1.
[Edit] Criteria of economic interests
The criterion of economic interests is a special criterion by which the non-resident is considered resident in Spain when you have activities or economic interests with the core or base in Spain. To not pay taxes, that person would have to show that the base or core is located in Spain.
[Edit] Criteria vital interests
The criterion of vital interests is another special criterion by applying a rebuttable presumption of residence in Spain if the spouse and minor children of the person residing in Spain.
[Edit] Regime impatriates
The regime called impatriates is an option provided for in Article 93 individuals, following the general approach that would be considered resident in Spain, and whose stay is because an employment contract, may be taxed under the Income Tax Nonresident (IRNR), with a significantly lower rate than income tax. To do this, there must have been resident for the last 10 years, and the income from work shall enjoy no exemption for IRNR.
The purpose of the scheme is to attract impatriates skilled labor to Spain. To qualify for it, also be taxed in the estate tax liability. The difference between the income tax or tax in tax in IRNR is significant, because in the first must declare all income at a maximum rate of 43%, while in the IRNR applies a flat rate of 24% only for rent obtained in Spain.
[Edit] income allocation scheme
The income allocation scheme is regulated by law in Articles 86 to 90. It refers to cases where there is a source of income by the person who comes from an entity that is not subject to corporation tax, either because it is a civil society, either because it is an entity without legal personality (eg a residents or a vacant inheritance).
Under Article 86, the income for such entities is attributed to the members which constitute them, so that the entity itself is not taxed by the income tax or even for corporate tax.
To determine the income attributable to each of the members (be they partners, heirs, community or participants), the following rules apply:
If all members of the entity under an imputed income are liable to corporation tax, taxed on it.
If there is any individual, be taxed on the income tax.
Article 88 states that such income will be graded according to the derivative nature of the activity or source from which they come for each of them.
[Edit] Exemptions
Article 7 of Law 35/2006 lists a set of income which are exempt in income tax. Such enumeration exhaustively sought reflect the exempted income, but on the other hand, Law 35/2006 and even various other laws, exempt income assumptions contemplated outside Article 7.
There are many cases of exemption referred to in the law. Listed below is a small group, for their special complexity or because of their special significance.
[Edit] Compensation liability due to personal injury
Damage to draw out the compensation must be personal. In order to prevent tax fraud, the exemption will be limited to the amount set by legal principle, judicial settlement, acts of conciliation and judicial settlement. Moreover, the derivatives of accident insurance contracts will be limited to the amount obtained by applying the valuation system damages caused to people in road accidents. Furthermore, in the event that the Public Administration reach a compensation agreement to finalize the procedure, there will be a total exemption from the settlement amount.
In all the cases mentioned, the limitation of the exemption is linked to the intervention of the relevant public, either through the judicial, administrative, or by law to mark a specific amount.
[Edit] Termination or Termination of Employment
The severance pay or termination of the employee is exempt up to the amount that the Statute of Workers set as mandatory. It also includes mandatory compensation established by the implementing regulations of the Statute and by that governing enforcement of judgments. By regulation, the exemption is conditional upon real and effective decoupling of the worker with the company, also establishing a rebuttable presumption by establishing that relationship continues as if in the three years immediately following the dismissal or resignation, there was a new services between the worker and the same company or another linked to it.
If the amount of compensation, by convention, agreement or contract, is greater than the obligations set out in the Charter and other norms mentioned, the exemption does not apply more than the required amount, the remainder being subject. However, if the Ordinance, to regulate the compensation of a particular case, contains an express reference to the amount that the parties have agreed to terminate the contract, such amount shall be exempt.
In the event that prior to conciliation, the employer deposit the legal compensation to the labor judge and recognize the unfair dismissal, this exemption shall also apply to the amount that the standard set for unfair dismissal.
In processes where there is a termination of employment contract by mutual agreement, in which the termination of the employment relationship was consensual and not the result of the unilateral will of the employer, compensation resulting enjoy no exemption.
[Edit] Social Security Benefits disability
The exemption for such benefits shall be exempt only for cases of permanent total disability or severe disability. The source of benefits shall be the Social Security or entities a replacement. If run parallel providing Social Security with other benefits referred to the same situation in agreements, insurance, mutual funds and others, not be without more than the amount provided by the Social Security as maximum benefit, paying the rest as work performance.
[Edit] Awards literary, artistic and scientific relevant
It will be necessary, according to Article 3 of the Regulation that such awards are delivered without any consideration, so that the body that it does not benefit materially granted to coast awarded the assignment or the limitation of the right of ownership. The fact that motivates the prize must have occurred prior to the call, and it should not limit the participation of contestants for reasons beyond the essence of the award.
With this is to prevent the exemption for awards serve to cover fraudulently onerous legal business between the false and the false grantor awarded. For more control, the exemption is entreaty, so to apply, must be ordered by the Tax Administration.
[Edit] Awards and betting sweepstakes
Sums are exempt for having won a prize in the lottery and betting organized by the National Lotteries State, the Autonomous Communities, the Spanish Red Cross and the ONCE.
[Edit] Income from work abroad
Be exempt employment income earned as a result of work done abroad for a company or entity not resident in Spain, or a permanent establishment abroad. It is necessary for governing the exemption, that in the place where you have done the work mentioned there is a tax identical or substantially similar to the Spanish income tax, and that the territory or country has not been qualified as a tax haven. The ceiling of € 60,100 exemption shall annually, and will not be compatible with the system of excesses excluded from taxation, the taxpayer may choose between one or the other depending on what suits your interests.
[Edit] Taxable
The tax base is the monetary quantification of the taxable event. Pursuant to the provisions of section 15 of the Act, there are three stages to determine the taxable amount and realizable.
For starters, the income must be qualified and quantified according to their origin, thus distinguishing between income from income, income from gains and losses, and imputed rents.
First, the income shall proceed in yields, whether of labor, capital (fixed and movable) or economic activities. To calculate the net income, after deducting the expenses deductible for income eligible. Such countable income are obtained in most cases by direct estimation, with the notable exception of earned income, which also supports simplified direct estimation and objective estimation (for indexes, signs or modules). A net yields shall apply to them corresponding reductions, a tax base minoraciones in trying to correct deviant escalation of the generation of income or notoriously irregular multi taxed at a single annual accrual.
Moreover, along with income mentioned, there category profits and losses, estimated by the difference in the values ​​of acquisition and transmission of property and rights. Unlike in the previous cases, this category is not itself a source of income, but a variation of the taxpayer's assets.
We should also mention the inclusion of an additional category that includes the four cases of imputed rents, respectively, real estate income in international tax transparency regime for transfer of image rights and those relating to the participants in collective investment in offshore tax.
Finally, it is noteworthy that Chapter IV of Title III of the Act provides two kinds of income (and therefore, two kinds of tax base), depending on the source of income. Thus, savings income is one that comes from certain types of return on investments and gains and losses arising out of the transfer of an asset. On the other hand, income is generally all that is not considered savings income.
[Edit] Salary income
Article 17 of Law yields integrity distinguishes the work of all those considerations and profits earned as a result of work that is not their own, or more specifically, that do not involve risk taking inherent in self-employment. Yields resulting from work not framed in the previous ajeneidad requirement, shall be considered earned income.
According to Article 16, all monetary considerations or in kind, directly or indirectly arising from personal work or employment relationship, and not having the character of income from economic activities, shall qualify as earned income.
In Article 17.1, to define the integrity of the work yields the legislator speaks of "all remuneration and profits." The Act makes this distinction because from the legal point of view, consideration means giving a part being compelled to do so, ie, there is a requirement, for example, the wage the employer is obliged to pay the worker. Instead, utility refers to the fact that the worker receives something without which the employer is legally obliged, like a gift, a course that the employer is not required to pay, etc.
[Edit] Assumptions
The considerations and common utilities in employment income, which lists ejemplificativamente Article 17.1, are salaries and wages, unemployment benefits, remuneration in respect of expenses, allowances and travel allowances in excess of the permitted contributions made by the company to the employee pension plans and received special contractual relationship.
Along with the income covered by the general definition, we must mention the existence of specific cases, under Article 17.2, must be considered earned income. In contrast to the 17.1, here is looking at a closed list enumerating a set of returns that are legally qualified labor, regardless of its compatibility with the general concept.
[Edit] Features
Benefits considered job performance by Article 17.2 include those from the INEM, pension for the spouse, Social Security pensions or officials; benefits derived from pension plans, the fees charged for the beneficiaries of pension plans business, and received by the beneficiaries of the insurance agency as provided by law for the promotion of personal autonomy and care for people in situations of dependency.
[Edit] Work Performance assimilated
Along with benefits, 17.2 considers a heterogeneous work performance compensation package that includes special labor relations, the income from courses, conferences and seminars, the returns generated by the publication of literary works, the remuneration to the members of the Board of Directors, etc..
Special mention deserve the economic rights that the founders of a company to establish this reserve. The founder called bonds, according to Article 11 of the Companies Act, shall not exceed 10% of corporate profits for a maximum period of 10 years. Regarding your tax assessment, Article 47 of the Regulation establishes a resort course for which there is a minimum estimate of 35% of the share capital equivalent to grant the same profit-sharing bonuses to founder.
[Edit] Performance in kind
According to Article 42.1, are in-kind income use, consumption or procurement of goods, rights or services, free or below market price, and for a particular purpose, are delivered to the taxpayer in return, produced not only by earned income, but also income from capital or profits and losses. However, the normal framework of the returns in kind is in an employment relationship.
An example of species yields fruit of labor, granting the company the employee housing, use or delivery of cars, loans at rates below the prevailing market, etc. On the other hand, produced a return in kind in the field of investment income could be an appliance granted by a financial institution in exchange for investing a certain amount of money in one of their funds.
Article 42.2 provides a number of assumptions which exclude consideration of returns in kind:
Use of goods for social and cultural services staff.
Delivery workers in active shares in the company, or other group companies in the amount not exceeding € 12,000 per year for the whole of the issued to each worker.
Study expenses for upgrading, training or retraining of staff employed.
Deliveries to employees at a discount products that are made in canteens, cafeterias commissaries or social character.
Health insurance costs.
Accident insurance or liability.
Loans agreed before January 1, 1992.
[Edit] Irregular income
Irregular yields are a category of income that have been generated in a period longer than two years and are not recurring or newspapers. The tax law gives special treatment because it is a type of performance characteristics are inconsistent with the tax progressivity is based reflect an annual accrual. Obtaining an irregular income, generated over several years, and that is taxed in one year, is an unjustified rate increase. To avoid such a situation, the amount of irregular income is decreased in response to the years of his generation.
To compute the amount, practiced a reduction of 40%. Disappearing previous years 40% reduction for benefits as income received from pension or social insurance mutuals, and reductions of 40% or 75% for benefits in a lump sum insurance collective.



[Edit] Deductible expenses
You may deduct the following:
Social Security contributions or general binding mutual officials.
Deductions for pension rights (quotes officials for retirement).
Quotes to orphans or similar schools.
Fees paid to the unions
Mandatory contributions to the Colleges of Professionals for mandatory quota limit of 500 per year (Article 10).
The legal expenses of the taxpayer for litigation against the person who perceives yields up to 300,00 euros / year.
[Edit] General reduction
The net salary income will be reduced in the following annual amounts:
If the net salary income is less than or equal to 9,000. - Euros: 4,000 euros.
If the net salary income is between 9000.01 and € 13,000 inclusive: 4.000 - 0.35 x (net yield - 9,000) euros
If the net salary income is greater than 13,000 euros or work with different incomes greater than 6500: 2,600 euros.
These reductions will be increased by 100% in the case of active workers over 65 and unemployed taxpayers who agree to offer at another location which is due to transfer of residence, this benefit will last the year and the next transfer.
Additionally, the reductions will increase:
Assets 3,200 for disabled workers with disabilities between 33% and 65%.
7100 for active workers disabled with disability equal to or greater than 65% or evidencing need help from other people or disabled, but not reach the 65% disability.
In any case, the balance following are missing, it can not be negative.
[Edit] Settlement Scheme
The settlement pattern of employment income is as follows:
Complete performance of the work (money-or in-kind) - Reduction of irregular income
- Deductible expenses
= Net income of previous work - General reduction
= Net salary income
[Edit] Investment income
LIR Article 21: "They are treated as returns of capital intact all the profits or considerations, whatever its name or nature, monetary or in kind, arising, directly or indirectly, of assets, property or rights, whose ownership corresponds wing contributor and are not found to business activities conducted by it. " That is, investment income derived from assets that are not assigned to any economic activity.
There is a rule to the boundary with gains or losses: one must understand that there is a capital return when the assets still belong to the person. For example, a package of actions: the fruits, which are dividends, return of capital are. But if I sell them, you gain equity.