5.2. personal taxation in Spain - note 5 - completing and ... · PDF fileCOMPLETING AND SUBMITTING A TAX RETURN – PART 2 INCOME This is a series of notes about personal taxation

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Ref: 00/0094 Date: 18/06/14 www.citizensadvice.org.es

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PERSONAL TAXATION IN SPAIN –COMPLETING AND SUBMITTING A TAX RETURN – PART 2 INCOME

This is a series of notes about personal taxation in Spain covering

Am I tax resident and do I need to submit a return Rates and allowances Double Taxation Installing the PADRE system Completing and Submitting a Tax Return (2 parts) Completing the Form 210 (for non-residents)

This note covers Personal taxation in Spain – Completing and Submitting a Tax Return – Part 2 – Income.

Introduction

This second part takes you through recording earned income including pensions from abroad, and investment income. It is intended as a guide for simple returns, and is not intended to replace professional tax advice.

If your income is relatively straightforward and simple, for example you receive

work related income, including a state or private pension from abroad, and/or

investment income (savings interest, annuities, dividends etc.), then it is not

difficult to complete and submit your own return. It’s helpful if you have a copy

of a previous return to follow. Once completed you can either submit online if

you have a digital Id (see this note in the CAB Spain files) or print a copy and

take it into your bank for payment. Some Banks also provide a facility to pay it

through online banking. Alternatively, because you don’t have to submit the return unless you want to,

you can use it to check the return prepared for you, or what your tax is likely to

be next year, or, if you’re like me, just for fun

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Background

Note 4 in this series explained how to download and install the PADRE system onto your computer. The first part of this note 5 explained how to complete the base data, and this is the second part which takes you through how complete a simple return covering work income (including pensions from the UK), and savings income. It is not a detailed explanation of every section as that would take too long, but is intended as a guide for people with relatively simple affairs to be able to complete and submit a tax return. As I mention above, if you have a previous year as a template, you will find that the easiest way, as there are headings and reference numbers in the system that you can follow.

Before you begin, make sure you have details of the information you are going to enter. All amounts are entered as totals for the year, and are in euros, so if some of your income is in another currency; make sure you have manually calculated the euro equivalent first. Throughout the note there are a series of screenshots for ease of use. There are also coloured arrows pointing to various items, so you can easily follow the note. For ease of use I include the colour in brackets at the side of each prompt. On all screens you either move forward by clicking an Arrow or by selecting Aceptar. Note all Spanish words are in italics.

This technique is used throughout the note

Finally, if you close the program it will ask you if you want to save a copy. However, you can also save a copy at anytime by clicking the small disk on the menu at the top (4th icon along). If you hover it will say Guardar (Save).

Start

Open the PADRE system which you installed previously, and hopefully have created and saved your draft return. If not, you need to consult Part 1. There is probably a shortcut on your desktop that looks like the Hacienda symbol with Padre 2013 written underneath. Double click this to open the program or I normally recommend that you run the program as an ‘Administrator’, as I generally find it works better run that way. To run as an “Administrator” position your mouse on the icon, and right click. A box should appear with a number of options. Select ‘Run as Administrator’

Selecting a File to Complete








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This is the first screen. The return you previously created should be listed here

(Red). Click the file you want or select Archivo (Blue) and Abrir.

Select the file you want to use (Green) and press Abrir Declaracion (Red).








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The Opening Screen

You should be familiar with the opening screen; it contains your personal

information. The number of pages in your return may vary from the screenshot, because it depends upon the “Tax Categories” you chose in Part 1. You can change the categories at any time by pressing Seleccion apartados de la declaracion (Red). Skip the next 5 screens Domicilio Habitual, Situacion Familiar, Devengo etc…, Asignacion Tributaria, Declaracion Complementaria until you reach A. Rendimientos del Trabajo, which is where you enter your work related income.

A. Rendimientos del Trabajo – Income from Work

At the top under Modalidad it says Declarante. If you click the drop down (Red) it says Declarante, Conyuge and Declaracion Conjunta. You should enter all the information individually for each person. You can swap on each screen that you use. You cannot enter data under the Declaracion Conjunta, (Joint Declaration). That is a calculated field based on the other two. You can use this at the end to determine which type of declaration is best for you in taxation terms. All the work related income is entered in Box 001 (Purple) click this and the pop up Rendimientos de Trabajo appears. Assuming you have calculated your total earnings (in euros), including pension income, but not annuities, this is the figure you enter in Importe Integro (Blue). Theoretically, if you have more than one source of income you should enter them separately. You do this by completing a separate form for each one. A new form is created by clicking Alta de Rendimiento (Orange). It’s exactly the same as the first one, and is








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accessed by clicking the arrows, which are blue if you have created a new form

In the example I am just using the one form, and the income amount is €15,500, (UK €15,000 and Spain €500) which should be entered as 15500. If you already paid tax on any amount in Spain (not the UK), you enter this in

Retencion (Green). I have put €100 for the example.

Gastos y Reducciones - Allowable deductions and expenses are

Seguridad social y otros - social security contributions cuotas satisfechas a sindicatos - union fees cuotas a colegios profesionales - professional associations

(max€500) gastos de defensa juridical - legal - employer disputes (max€300)

I am including details on the next sections for information purposes only

Retribuciones en Especie is for payments in kind.

Planes Pensiones – is for pension, social welfare, insurance and other contributions paid by your employer

Aportaciones al Patrimonio Protegido de Discapacitados is disability payments received, some of which are subject to tax.








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In this example I have not included any of these items, but if you want to see how they work, you can enter a figure and press Aceptar. You can go back into the data entry and delete the figure. It’s a good way to learn how the tax system works.

When you have completed your entries, press Aceptar

You can see from the screenshot that the total of your income now appears in Box 001 (Red). If you have entered any income in kind etc. these will be added to 001 and the total will be in Box 009 (Blue). Expenses will show in Boxes 010-013 and your net income shows in Box 015 (Green). Note the tax already paid of €100 does not appear. Box 016 (Purple) shows your earned income allowance. Remember if your earned income exceeds €13,260, then the maximum earned income allowance is €2,652. Finally Box 020 (Orange) shows your taxable amount before personal allowances.

B. Rendimientos del capital mobiliario – Investment Income

If you have selected it, the next screen Rendimientos del capital mobiliario is to record your investment income.

To enter data in any of the boxes, click in the box, and then the icon that appears and you will be taken to the entry form. Interest from Savings, deposits etc. are entered into Box 021 (Red). Note I have swapped to the Conyuge (spouse) entry form for this example. The GROSS amount is entered








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into Ingresos integros (Blue). I have entered €1,200 (UK €500 and Spain €700). Any tax already deducted in Spain (but not the UK) is entered into Retenciones

(Green). Click Aceptar when finished.

Box 024 is to enter dividend income

Dividends upto €1,500 are exempt from tax, (Note the exemption is per person, and per joint return.) except for those received from las instituciones de inversión colectiva (ICC), and from shares bought less than 2 months before the dividend was paid. Select 1 from the Tipo de Rendimiento (Red) to identify ordinary dividends. In the example I have entered an amount of €2,000 Importo Integro Percibido (Green) which you can see at the bottom of the data entry box








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shows the taxable amount of €1,000. I have entered €100 Retencione (Blue).

Annuity income is taxed very favourably in Spain, and the taxable amount is established on your age on the day it is drawn if it’s whole of life, or the duration if temporary. Only enter the taxable amount in Rendimiento integro. (Blue) (See appendix 1). In this example I have entered €5,000 in Box 027 (Red), but note you can also enter annuities in Box 026. I strongly recommend you have at least one return completed for you to ensure you enter it in the correct box. Note I have switched back to Declarante (Green). If you do not enter any Retencione (but remember only enter tax paid in Spain, not the UK), a message

appears to tell you. Press Continuar, and it will record the information.








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In this part of the model I have been switching between Declarante and Conyuge. This is because I want to show how the model works for joint returns. You can see the first screen we completed for Conyuge shows income of €1,700 in Box 032, and the next screen for Declarante €5,000.

The final screen shows the Declaracion Conjunta (joint declaration) (Red). You can see that the income Box 032 (Blue) is the total of the two entry screens.

You have now completed the basic entries for Income from Work and investments.

The next screen in this section is where you record income from other capital assets, which are included in General Income. These are included here for information only: Rendimientos procedentes - Income from

Box 033 - del arrendamiento de bienes muebles, negocios o minas o de subarrendamientos – movable property etc.

Box 034 - de la prestacion de asistencia technica, salvo en el ambito de una actividad economica – technical assistance except normal work

Box 035 - de la propiedad intelectual cuando el contribuyente no sea el autor – intellectual property but not written

Box 036 - de la propiedad industrial que no se encuentre afecta a una actividad economica - industrial leasing








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Box 037 - otros rendimientos del capital mobiliario a integrar en las base imponible general - other capital income to be included in the general income base. Allowable costs and expenses Gastos Deductibles are entered against each item.

C Bienes Inmuebles …… - Property Income

This section covers property that is not your habitual residence (where you normally live). It can be situated abroad or in Spain, and can either be for your own personal use or rented out. Remember, to select either Declarante or Conyuge at the top. If the property is jointly owned, select Declarante and you will be able to save the data for both at the end. This note explains how the model works, but only provides an example for property not rented out, which is subject to imputed income. If you have more than one property then you can add more by clicking Alta Inmuebles.. (Blue). Click Box 046 Propiedad (Red) and complete the data entry box. % Propiedad (Red)

enter the percentage of property you own

% Usfructo (Blue)

the percentage is it’s a usufructo

Naturaleza (Green) ) - you have select from keys 1 – 2 where

1. Urbano 2 Rustico

Uso o Destino (Orange) - you have select from keys 1 – 6 where

1. Rented out. 2. Available for personal use only 3. Rented out and for personal use 4. Rented out as an accessory e.g. parking space 5. Rented out as a property accessory and available for personal use 6. Property that in cases of separation or divorce is used by the children

and other parent.

Note, keys 4 and 5 normally relate to your main residence

Situacion (Black) - you have select from keys 1 – 4 where








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1. Property registered in Spain except Pais Vasco or Navarra 2. Property registered in Pais Vasco or Navarra 3. Property not registered in Spain 4. Property located abroad.

If you select 1 or 2, you must provide the catastral reference There are two other boxes to complete, depending upon whether the property is rented out or for your own personal use. Renta Imputada (Pink) – imputed income (key 2,3,5) or Rendimiento neto reducido (Purple) – rental income (key 1,3). When you click in Renta Imputada the data entry box appears.

You share and any usofructo are already completed from the keys in the previous data entry box. Assuming it’s for your sole use enter No in Inmueble a disposicion…..(Red). If you answer Si you have to enter the percentage in the next box (Blue). Next you have to enter the Valor Catastral (Green). If your property is in Spain you will find this on your IBI bill. If it’s abroad then you declare 50% of the purchase price (in euros). The next requirement is to confirm whether the Valor Catastral has been revised. Enter SI or NO. (Orange). Next enter the number of days available for personal use. (Purple). Note, if the property is rented out, say for holiday lets, and you rent it out for 100 days, then it is available for the remaining period, and you should enter 265. Once all boxes have been completed, the Renta Imputada is calculated (Black). Press Aceptar and again on the first screen, and it will ask if you want the same data to be

transferred to the Conyuge declaracion. Press Aceptar or close it.








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If the property is rented out, then you have to declare the income less expenses by completing the data entry box for the Rendimiento neto reducido. The following screen is provided for information purposes. It shows the data entry box that needs completing (Red).

H. Base Imponible general y base imponible del ahorro -Taxable Base

The next screen is a summary of the taxable income before personal

allowances. Note each screen can be displayed individually or jointly.








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The next few screens contain information about personal allowances etc. You can skip through these until you reach

N Calculo del impuesto y resultado de la declaracion. If you have paid any tax in another country, that you wish to offset under a Double Tax Agreement (but see note 3 about how this works), this is the section where it is entered. If you didn’t select this section you need to include the option in the model, so click Selectionar apartados de la declaracion at the bottom of the screen, and the Selection de Conceptos will appear. Tick the box Regimenes especiales and the third sub box Imputaciones de rentas ….. (Red). Press Aceptar, and you return to the model

There are normally three screens, four if you have a claim for double taxation relief. The first one shows your initial tax calculation based on your taxable income less personal allowance. The second screen shows your initial tax calculation (Box 504). Under Deducciones if your income from work is low (below maximum of circa €14,000) it may show a tax credit upto a maximum of €400. (Box 506). Next you can enter in Box 505 por doble imposicion….. any tax already paid in another country e.g. UK. Click the box (red) and the data entry box Doble imposicion internacional appears

Select Tipo (Blue) – 1 Rendimientos del Trabajo o de actividades economicas and then Desglose in Rentas incluidas en la base general. (Dark Blue) Another data

entry box appears. Deduccion por doble imposicion internacional. Enter the net amount of any general income received in Rendimiento neto de Trabajo (Green) I have entered €14,000, which is the amounts I entered of €15,500 (net of tax). The tax deducted of €1,000, is entered in Impuesto satisfecho en el extranjero








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(Orange). If you have any income from work from the UK which has not been taxed e.g. state pension, create a new line, but select Tipo (Blue) - 2 Otras Rentas….. and then enter the amount otras rentas…… (Black). Press Aceptar.

If you have any investment income that has already been taxed click Tipo – 2

Otras Rentas….. in line 2 and Desglose in Rentas incluidas en la base del ahorro. (Blue). The data entry box appears again, but this time covering investment income. Enter any dividend income in Importe integro (Red) and the gross amount of interest and/or annuity income received in Otras Rentas… (Green). Any tax that has been deducted (but not in respect of dividends) should be entered in Impuesto satisfecho ….. (Orange). In this example there was just the €5,000 annuity income. Press Aceptar.








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Now you have to switch to Conyuge as there was some tax for the Spouse. These are entered in the same way. Note that I have entered an amount of €1,000 for dividend income, (Red) rather than €2,000 as in this example this is the amount received from abroad. The balance was received in Spain, and we claimed tax paid of €100 in the original entry. These are just examples to show how the model works. In line 2 I entered interest income of €500 for the same

reason, and claimed €100 tax paid in the UK. (Green). Finally the tax deducted from dividend income should be recorded in Box 507

(Red)








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You have now completed all the entries. The next screen shows any Spanish tax already declared earlier, and the final screen shows the amount of tax due. At this stage you can check whether it is better to declare individually or jointly. Essentially, if one partner has income of less than €3,400 it will be beneficial. You can change each of the previous screens in this section, to see how the calculations differ, but essentially the last screen contains the key information, which is how much tax is payable. In the example model the tax payable is €1,923.07 for the Declarante and a refund of €200 for the Conyuge

(this is tax declared as already paid in

Spain. Note there is no refund for any tax paid in the UK. Finally the tax due for a Declaracion Conjunta is €1,134.64, (Red) so this is the one to choose.

The next screen O Importe del IRPF…. Relates to some information about how your tax is shared with the Autonomous Community you live in. There then follows a number of Anexo screens which relate to claims for property relief and other things, including relief of rent paid if your income is below €24,107.20.








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Documento de Ingreso o Devolucion

The final screen is where you set up how you are going to pay the tax due (unless it’s a refund). The tax payable or refundable is shown in Box 540. (Red) If it’s a refund, you

see a different screen (see above. You can choose for it to offset against your partner if they are due to make a payment (Box 7) (Purple), or choose the option to transfer to the bank, (Blue) and enter your bank details (Green) or alternatively donate it to the Government (Blue). Finally complete the declaration (Purple).

Tax payable is shown in Box 540 (Red) in the screen below. Box 535 is solely for








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a supplementary declaracion. Fraccionamiento del pago e ingreso is where you can opt to either pay your tax in full (Box 1) (Blue) or in two parts (Box 6). (Green). You can only do this if you submit your return on time. If you choose Box 6 the amount of the first instalment (60%) is shown in Box l1. You also need to select Box 3 (Black) if you want the direct debit to be charged to the same bank, or Box 2 (Purple) if you don’t want it charging there. Once you have chosen whether to pay in full or in parts, complete Box l1 Forma de pago. The options are

Domiciliacion bancaria - Direct debit to your bank, submit electronically by 24th June, debited to your bank account on the 30th June

Adeudo en cuenta – You will pay through your bank, submit electronically and pay via online banking, or print and present to your bank for payment. This needs to be complete by the 30th June.

Efectivo y formas especiales de pago – cash and other forms of payment.

If you choose Domiciliacion bancaria you must submit the return electronically (using a digital ID) by the 26th June, and your account will be debited on the 30th. The second instalment will be debited on the 5th November 2014. If you choose Adeudo en Cuenta, you can either print off the return and take it to your bank for payment, in which case you will be charged on presentation, or alternatively you can submit it online (with a digital ID), in which case you will receive a code which you use to pay through your bank online, if they provide the facility. This process needs to be completed by the 30th June The final option is for various forms of payment including cash. Finally complete the declaracion at the bottom (Purple. Ensure you save Guardar (Red) your return, and check for mistakes. Select Herramientas (Blue) and then Errores y Aviso Pendiente. A box appears containing various messages. A blue exclamation mark is advisory, and you will be able to continue with the presentation, but you should check what they are saying. The last example is saying to check the Autonomous Community I have selected, as it does not correspond with the address. This was because I put the example address as Barcelona, but selected Valencia. I changed this. A Red Stop sign means that you must correct this before you can continue. In this example the format of the bank account is incorrect. The 34 should go in the box after ES.








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Assuming you have corrected any Errores you are now ready to either submit your return electronically (if you have a digital ID), or just print and take to the bank.








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Electronic submission

If you are going to submit your return with a digital ID. I strongly recommend selctioning option 1 “Domiciliacion bancaria”. This is the easiest way, but has to be submitted by the 24th June and your account is debited on the 30th.

Select Archivo ( Red) and Presentacion Telematica (Blue)

Next you will be offered the option to print individual returns or Conjunta. Your choice will depend on whether you decided to submit individual or joint returns. Press Aceptar. The Errores y Avisos box will appear again. Either Revisar if you need to change anything otherwise Continuar. You may get a message box saying you haven’t assigned any tax to La Iglesia Catolica o Otra Fines Social. If you want to press Deseo, otherwise No Deseo. The next screen asks you for a name to save the file. It will prompt with you NIE; you can change this if you want to. Otherwise press Save. The next screen confirms it is complete.

The next screen is the presentation screen (Red). You have to select your digital ID at this stage (Blue). Note if you opted for a joint (Conjunta) return, you have to select a digital ID for each person. The data on this screen has been obscured.








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Once you have selected both ID’s simply press Realizar Presentacion (Purple and the file will be uploaded. The final screen confirming it is submitted appears. You can see or print a pdf version (Blue). You can also change your

bank details online before the payment date (Red). Press Finalizar.








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If you select Option 2 “Adeudo en cuenta”, you have to pay at the time you upload the file (although you can do this until the 30th June). This means you either have to upload the file to your online bank, and make the payment, and then provide the NRC – Numero de Referencia Completo. (Red)

Alternatively, you can do it via the Hacienda website, by either authorising them to debit your account and obtaining the NRC, or by credit/debit card.

The process is the same as above, except the presentation screen is different.

You select the Digital ID in the same way as above, select the option you want and then press Realizar Pago (Obtener NRC) (Purple).

Depending upon the option you have selected you are taken to different screens. The option to Cargo en Cuenta (Debit your account) is precompleted, and you should then just need to press Sign and Send (Red)








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If you select Pago con Tarjeta (Pay with card) you have to enter your card details (Red) and click to complete (Blue). Note I did not complete these transactions because you can only use one option, but I would think they complete and you back to the completion screen in the model, similar to option 1, but with confirmation of your payment option.

Printing your Return

Select Archivo (Red) and Imprimir. (Blue)








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Next you will be offered the option to print individual returns or Conjunta. Your choice will depend on whether you decided to submit individual or joint returns. Press Aceptar. The Errores y Avisos box will appear again. Either Revisar if you need to change anything otherwise Continuar. You may get a message box saying you haven’t assigned any tax to La Iglesia Catolica o Otra Fines Social. If you want to press Deseo, otherwise No Deseo. The next screen asks you for a name to save the file. It will prompt with you NIE; you can change this if you want to. Otherwise press Save. The next screen confirms it is

complete.








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Press OK and the pdf file of your return will open.

You now need to print and sign the return and take it to your bank.








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Appendix 1 – Annuity Rate Calculations

Whole of Life – From when payments started:

Under 40 - 40% (of gross amount)

Between 40 and 49 - 35%




0Over 70 - 8%

Temporary annuities – For Duration not exceeding:

5 years - 12%

More than 5 and 10 or less - 16%

More than 10 and 15 or less - 20%

More than 15 - 25%

Written By: Philip Carroll

18/06/14

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5.2. personal taxation in Spain - note 5 - completing and ... · PDF fileCOMPLETING AND SUBMITTING A TAX RETURN – PART 2 INCOME This is a series of notes about personal taxation

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