A 'Guiri' Guide to the Declaracion de la Renta
It’s that time of the year again, the dreaded Declaracion de la Renta. Will you be lucky enough to get some money back this year? Or will you be one of the unlucky ones who will end up actually owing money back to the Spanish government? This will depend on a few factors which we will look at in this handy guide.
So, What is the Declaracion de la Renta?
Firstly though, what exactly is this Declaracion de la Renta thing that everybody is talking about? Simply put the Declaracion de la Renta is the process of filing your income taxes in Spain. As many other expats struggle with this we thought that we would put together this handy guide in association with one of our top clients Servicentro, a company that offers accounting management in Seville. Servicentro have been operating for over 40 years now and have plenty of experience offering tax advice to expats in the Seville area.
Who exactly needs to file a tax return here in Spain?
Basically, if you are in Spain for any longer than 182 days you are considered to be a tax resident and therefore must submit a tax return form.
That said there are certain tax treaties that exist for more complex circumstances, for example If you are splitting your time between multiple countries or you own properties/business interests elsewhere. These treaties will specify exactly where you will need to declare your taxes.
Another exception is for those in full time employment who earn less than €22,000 per year from just one source. For those that have more than one source of income (for example teachers who work for multiple academies) you will need to file a tax return if you earn more than €11,200 per year.
When do I need to file my tax return by?
The tax year in Spain runs from January 1st to December 31st, however the deadline to file your tax returns is June 30th, though if you have tax payable and wish to pay by direct debit the deadline is June 25th.
What if I decide I want to file my tax return late?
This would be a rather foolish move on your part as you could be liable to pay a late fee (usually €100 if there is no tax payable.) On the other hand if you file your return late and there IS tax payable you are liable to pay a percentage of the tax as a penalty fee.
The process can be quite complicated, especially if you are not familiar with Spanish tax laws and do not speak the language. If you do need assistance you should get in contact with a ‘gestor’ such as Servicentro as they are more than well equipped to deal with any queries you might have.
What is the best to way to file your tax returns?
Online. Although you are also able to lodge your tax return via a manual form, however filing your returns online is much easier and more convenient. You can file your tax return online at https://www.agenciatributaria.es/AEAT.internet/Renta.shtml. You will need to obtain your tax template (Borrador de la Declaracion.) To obtain your template you can use either your Borrador reference number or your RENØ number along with your DNI/NIE number, electronic certificate or Clave PIN.
That said, if you prefer doing these things the old fashioned way the manual forms are available from the tax office (La Tributaria) and any licensed tobacconist (Estancos).
What happens if I owe money?
If it turns out that you owe money, you can choose to pay off the sum in either one or two payments. The first payment will normally be taken from your bank account around July 1st, if you have chosen the 2 payment option, the 2nd payment will be taken out of your account around November 1st.
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What happens if I am owed money?
If you are owed money then la hacienda have until December 31st to pay you the amount, though it is normally transferred to you within a few days. That said if they do end up paying you later than the end of the year, they will have to pay interest on whatever they owe you. So at the end of the day not such a bad result!
Would you recommend filing your first tax return yourself?
If you can speak Spanish to a decent enough level you should just about manage. However, that said, if your Spanish isn’t so good and you find the bureaucratic system here to be a bit daunting, we would advise that you find a local gestor to assist you. As mentioned earlier, if you are in the Seville area we can recommend Servicentro for all your tax needs. They are an accredited member of the Spanish accountants association and therefore are able to file your tax returns on your behalf online. They also have tons of experience assisting expats with any tax queries they might have. You can find more information here.