! Murcia Today – Ways to Pay Less on Your Income Statement in Spain

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Date of publication: 12/29/2021

Personal income tax will be filed in Spain between April and June of next year

There are still a few months before personal income tax is due in Spain for the year 2021, but PwC financial experts have already come up with a few tips and tricks that could lead to substantial savings for taxpayers. in the next statement. . The annual payment will be due between April and June 2022, but there are still several ways to save a euro or two before the ball falls this year.

Pension plan contributions

In 2021, the maximum contribution that a taxpayer can deduct is 2,000 euros in total, provided that this amount does not exceed 30% of the overall economic income for the year.

Contributions paid to pension schemes reduce the taxable income from personal income tax, so in an example where a taxpayer earned 30,000 euros in the year, assuming he paid the maximum contribution of 2,000 euros, the amount payable will only be taken from the remaining 28,000 rather than the full income.

Since the tax rate is 30%, the savings in this case would amount to 600 euros, and the more you earn, the more you save.

Until last year, the maximum allowable pension contribution was 8,000 euros and is expected to be further reduced in 2022 to just 1,500 euros. So now is the time to maximize the annual plan.

Invest in start-ups

The government allows a deduction of 30% of the amount invested in shares of newly created companies, up to a limit of 60,000 euros.

Compensate for losses with gains

If you invest in the stock market, mutual funds, or cryptocurrency, the Treasury allows you to offset losses against gains that have been amassed during the year.

It is therefore wise to sell at the end of the year and thus save on the tax rate of 19-26% applied on the net amount of capital gains realized during the year.

Work abroad

People who perform work for a non-Spanish company or a company abroad can be exempt up to 60,100 euros per year. The exempt income depends of course on the number of days during which the worker has been posted abroad.

Liquidate part of the mortgage payment

For those who bought a house in Spain before January 1, 2013, up to 15% of what was paid on the mortgage in 2021 can be deducted, up to a maximum of 9,040 euros.

Those who have made lower mortgage payments during the year can take advantage of this tax advantage by amortizing part of the loan on a habitual residence.

Sell ​​a habitual residence

In the case of having sold the main residence this year, it will be possible to avoid paying the capital gain tax (tax rate between 19-26%) if the amount obtained is reinvested in whole or in part, within two years, in another house which will be considered as a principal residence.

Donation deductions

Donations made to associations allow a deduction of up to 80% on the first 150 euros. The remainder of the donation can be deducted at 35%, unless donations of the same amount have been made within the last two years to the same organization, in which case the amount of the deduction will be increased to 40%.

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