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Taxes For Members

11 mistakes to avoid when filing your Spanish tax return

The Local Spain
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11 mistakes to avoid when filing your Spanish tax return
The mistakes to avoid on your Spanish tax return. Photo: Amy Hirschi / Unsplash

Whether you've completed Spain’s annual 'declaración de la renta' (income tax return) before or this is your first time, there are several key points and common blunders you need to keep in mind before doing so.

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Spain's annual tax campaign known as 'la declaración de la renta' this year began on April 3rd and you will have until July 1st to submit it. This year you will fill out your details for your earnings in 2023. 

Even if you're an employee, rather than self-employed or autónomo, and your employer automatically deducts your tax from your paycheck each month, there are lots of points you need to keep in mind when filling it out or even when getting a gestor or accountant to help you. 

The tax authorities will provide an estimate and an initial draft of your declaration and include how much they believe you should pay, but this isn't always accurate and won't include all the information, so it's important to keep these points in mind. 

Find out whether you’re required to fill it out

Keep in mind that not everyone must automatically fill out the income tax form. You will have to complete it if:

  • You are employed and have an annual income over €22,000 from a single employer 
  • You have earned over €15,000 from multiple employers, as long as the amount from the second or third employer exceeds €1,500 per year. 
  • You are self-employed or have your own business. This year you have to file one even if you've made a loss. 
  • Your income from yearly dividends, interest and capital gains exceeds €1,600
  • You receive rental income over €1,000 per year
  • It is the first year that you are filing a tax return in Spain

READ ALSO - The tax return scams you need to avoid in Spain

Check the draft

Before submitting the form, you will typically see a draft of what the tax authorities believe your personal income tax will be, according to the data they have. Of course, this may not be correct or complete, so it’s important to check each section carefully and not simply submit the draft calculation.

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Check your tax address

If you moved house during the past year and did not notify the Treasury, be careful when exporting your data into the tax form. It’s likely that the old address will appear. Even though this is a small mistake, it has its consequences and you may incur a fine.

Review your family status

Did you have a child or get married since your last tax return? You must explicitly indicate the change in your family and personal situation in the dedicated section. For example, the difference between including or not including your children in the income statement is huge.

Remember though that the Treasury takes into account your situation as of December 31st of the previous year. This means that if you became a parent in January of this year, you must wait for the next Income Tax return to apply your deduction. The same applies to marriages and divorces. This is one of the most common mistakes and can cost you if you get it wrong.  

READ ALSO: How to complete Spain's Declaración de la Renta tax return in 2024 

Not including information on your second property if you have one

If you own a second property such as one in your home country or one that you use in summer near the beach, for example, it's important to include this on your declaration too, as many people forget. 

Home rental deductions

It’s important to keep in mind that only rental contracts signed before January 1st, 2015 are entitled to a deduction. The Treasury will also not automatically include this information in the initial draft, so you will need to add it. If you meet this requirement, you can deduct 10.05 percent of the amounts paid in the tax period for the rental of your home. Don't forget to check if your region includes any type of additional deduction to the rent before confirming.  

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Deductions for maternity, incapacity or for a large family

If you are entitled to any deductions because you are a mother with a child under three years old, are on incapacity benefit or have a large family, then you should know that the tax authorities will not automatically include this information in the initial calculation, so you’ll need to add it all yourself. For example, mothers of children under three years of age are entitled to a maternity deduction of €1,200 that they can collect in advance at a rate of €100 per month. There are also deductions for childcare expenses for working mothers.

READ ALSO - EXPLAINED: The key changes to Spain's 2023/2024 annual tax return

Be aware of any regional deductions

You may be entitled to certain deductions, depending on where you live in Spain. In order to pay less income taxes, you will almost always have to fill in the data yourself. These could include deductions for school expenses, buying a house or investing in newly created companies. 

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Remember to include interest, dividends and life insurance

Other amounts that will not automatically be generated and included in the draft version of your calculation are the bank interest you have earned from savings, any dividends you are paid from companies or life insurance payouts. You must include all of these in order to get an accurate calculation and ensure you're not withholding any important financial information. 

Information for landlords

If you are a landlord and rent out a property, you will have to pay taxes for the profit you obtain and enter this data manually as it will not have been calculated for you. Remember that by including the rent you may be able to subtract expenses such as your IBI bill and your community bills for cleaning and upkeep of the building. In addition, you may be able to get a general reduction of 60 percent on the resulting amount. In the end, you will pay much less taxes than you think for renting your home in Spain. Be aware, this is not the case for vacation rentals, only if you're renting out long term.

Forgetting that unemployment benefits should also be included

It's important to note that unemployment benefits are considered to be like a second income. If the payments exceed €15,000 per year and there are two payers, you must also remember to complete a tax return. 

If you're unsure about your tax status, completing the tax return or if you have to, it's best to contact a tax professional such as a gestor. Everyone's situation is unique and so the advice can change. 

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