What happens if I don't do my Spanish annual income tax return?

Spain's annual income tax return is known as the la declaración de la renta and the period in which to complete it for 2023 has now begun, running from April 11th until June 30th.

Over 22 million taxpayers must file their Personal Income Tax (known as 'IRPF' in Spain), and for most of them that's regardless of whether they owe taxes to the Agencia Tributaria (Spain's tax office) or they are owed a tax rebate.

But what happens if you don't do your income tax return in Spain?

The Local breaks down the possible penalties, as well as who is exempt from filing a tax return, below.

READ ALSO: What's new for Spain's 'La Renta' tax return in 2023?

Exemptions

First of all, it's worth knowing who is and isn't exempt from doing la declaración de la renta.

As a general rule, contract workers who have received more than €22,000 gross from a single payer or more than €14,000 from several payers are bound by law to file an annual income tax return.

Self-employed workers, autónomos, are generally expected to complete their annual income tax declaration regardless of their earnings, just as they have to do every quarter.

People who have made income from property or income from movable capital of more than €1,600 during the tax year, or €1,000 in imputed income or treasury earnings, are also obliged to complete their declaración.

Anyone who has received state subsidies or tax deductions when buying a property, those on disability benefits and people who've received contributions to pension plans must also complete their annual tax return.

Finally, people who get tax deductions because they're subject to double taxation treaties must complete Spain's renta too. 

So you're probably wondering who is actually exempt from completing Spain's annual tax return?

If a contract worker makes less than €22,000 gross a year from a single employer, Spain's main tax body states that they don't have to fill in their annual income tax return.

Or if they earn under €14,000 gross from several payers they're also exempt. If they surpassed that amount and the second highest payer didn't pay more than €1,500 during the whole year, they are also exempt from filing their taxes up to the limit of €22,000.

Penalties and fines

If you don't complete la renta when you should, or you miss the deadline, Spain's tax office does fine people, usually through a surcharge on the amount that they should have declared.

There may be several different situations when not submitting the declaration, and depending on the circumstance (and how overdue the return is) the fines can vary.

READ ALSO: The important income tax deadlines in Spain in 2023

The main difference is whether the result of the declaration is positive (ie, taxes to be paid) or negative (ie, you are owed a tax rebate) and by how long you have bypassed the deadline.

It also depends on whether you have formally requested an extension and the Tributaria knows you will not be filing your tax return on time and whether or not they have sent you a notification that your tax return is overdue; in this case, the penalties go by the amount not declared as opposed to the length of the delay in making the formal declaration. 

Without a reminder, the fines are:

• Up to three months late: 5 percent surcharge
• 3-6 months: 10 percent
• 6-12 months: 15 percent
• 1-4 years: 20 percent plus interest 

With reminder, the fines are:

• Of the total (base with less than €3,000) owed: 50 percent surcharge
• Of the total, avoided through 'ocultación' (tax concealment or evasion): 50-100 percent
• Of the total (fraud): 100-150 percent 

Tax rebates

If your tax return is negative, that is to say, the tax man owes you money, the penalties are less severe. 

• €100 if the Agencia Tributaria does not make a request.
• €200 if the Agencia Tributaria does not send you a formal request.

READ ALSO: What are the penalties and prison sentences for tax evasion in Spain?