Some tax credits and reliefs will increase. Under the PAYE system, income tax is charged on all wages, fees, perks, profits or pensions and most types of interest.
Tax is payable on earnings of all kinds that result from your employment including for example, bonuses, overtime, non-cash pay or 'benefit-in-kind' such as the use of company car, tips, Christmas boxes and so on. Money you get which is not liable to income tax may be liable to other taxes. If you get gifts or inheritances, you may have to pay Capital Acquisitions Tax. If you sell assets such as property or shares you may have to pay Capital Gains Tax.
Your credit certificate shows the rate of tax that applies to your income and the tax credits you are entitled to. At the start of the tax year, Revenue will automatically issue you a new tax credit certificate. If your circumstances change during the year, Revenue will update your tax credit certificate and RPN. Your tax credit certificate and RPN instructs your employer whether to calculate the tax you owe using:.
For most people, the cumulative basis of tax should be the normal position and makes sure your tax and USC liability is spread out evenly over the year. Under the cumulative basis, your tax liability is calculated based on your total income from the start of the tax year.
The tax which must be deducted each time you are paid the pay period is the cumulative tax due from 1 January to that date, reduced by the amount of tax already deducted in other pay periods. If a tax credit or standard rate cut off point or both are not used in full in a pay period, the unused amount can be carried forward and used in the next pay period within that tax year.
It means that the pay for each period is dealt with on its own, separate from previous weeks or months. Your employer will deduct income tax from your pay on a week-to-week basis. Your yearly tax credits and cut off points are not backdated to 1 January and do not accumulate for each pay period. This means you could be overpaying tax.
You may be taxed on a temporary basis called emergency tax if you are changing job or starting work for the first time. To avoid paying emergency tax you should register the details of the new job with Revenue's Jobs and Pensions online service in myAccount. You can get more information about tax and starting work or changing job.
Tax is charged as a percentage of your income. The percentage that you pay depends on the amount of your income. This is known as the standard rate of tax and the amount that it applies to is known as the standard rate tax band. KPMG International provides no client services. All rights reserved. A global survey of income tax, social security tax rates and tax legislation impacting expatriate employees.
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Share close. January Overview and Introduction Income Tax Special considerations for short-term assignments Other taxes and levies Immigration. Overview and Introduction. Back to top. Income Tax. Tax returns and compliance When are tax returns due?
That is, what is the tax return due date? What is the tax year-end? Unless the taxpayer dies on a day other than 31 December. What are the compliance requirements for tax returns in Spain? Residents Spanish resident employers and permanent establishments of non-residents are obliged to make withholdings of taxable income paid to their employees.
Tax resident individuals are obliged to report by filing a Form the following assets and rights located outside of Spain to the Tax Authorities: Accounts in which the individual is the titleholder, or in which they are a representative, authorized person or beneficiary, or in which they have disposal powers. Securities, rights, insurance and life or temporary annuities. Real estate or rights on real estate.
In those cases where the individual filed the Form in previous years, a new reporting obligation would only be necessary if: The value of the assets, in each group of assets above mentioned, has been increased in more than EUR20, Non-residents In general, non-resident taxpayers are taxed at flat rate on income obtained in Spanish territory or which arises from Spanish sources, at the general rate of 24 percent for work income and at the rate of 19 percent on capital gains and financial investment income arising from Spanish sources.
Tax rates What are the current income tax rates for residents and non-residents in Spain? Non-residents In general, non-resident taxpayers are taxed at the rate of 24 percent on income obtained in Spanish territory or which arises from Spanish sources, and at the rate of 19 percent on capital gains and financial investment income arising from Spanish sources.
Residence rules For the purposes of taxation, how is an individual defined as a resident of Spain? An individual is considered a Spanish resident for tax purposes under the following considerations and if they meet either of the following requirements: They remain in Spain for more than days in a given calendar year. Their business or economic interests are directly or indirectly located within Spanish territory. Termination of residence Are there any tax compliance requirements when leaving Spain?
What if the assignee comes back for a trip after residency has terminated? Communication between immigration and taxation authorities Do the immigration authorities in Spain provide information to the local taxation authorities regarding when a person enters or leaves Spain? The tax authorities could request information to the immigration authorities in this regard. Economic employer approach Do the taxation authorities in Spain adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development OECD treaty?
De minimus number of days Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? There is no de minimus number of days. Types of taxable compensation What categories are subject to income tax in general situations? Base salary. Benefits-in-kind are taxable, although there are cases in which a tax saving might be obtained by providing an employee with a benefit-in-kind rather than the cash equivalent.
School tuition reimbursements are taxable. Expatriate premiums and assignment allowances are in general regarded as taxable. Housing allowances paid in cash are taxable. If the employee is provided with the free use of a house rented by the employer, the amount of the rental payments made by the employer will be fully taxable for the employee.
Deferred compensation is taxable if paid in respect of services performed in Spain. However, the actual tax paid will vary depending on whether or not the individual is considered resident in Spain in the year in which the compensation is paid. If they are a resident, the compensation will be added to their worldwide income and taxed at progressive rates consideration might have to be given in such a case to the eventual application of the domestic exemption of up to EUR60, for employment income obtained for work performed outside Spain.
However, such limit is increased in an amount of EUR8,, provided that such increase derives from contributions made by the employer to company pension plans i. A reduction of 30 percent over a maximum base of EUR, might be applicable, if certain requirements were met and was allocated in general to a single tax period, to work income generated over a period of more than 2 years, provided that the taxpayer had not obtained any other work income generated over a period of more than 2 years to which they have applied such reduction within the previous 5 tax years, excluding that deriving from the termination of a labor relationship for the purposes of this exception , or to those which are specifically regarded by PIT Regulations as being obtained on a non-regular basis.
Intra-group statutory directors Will a non-resident of Spain who, as part of their employment within a group company, is also appointed as a statutory director i. See comments to the above two questions. For the amount of the director fees received, taking into account the above considerations. Tax-exempt income Are there any areas of income that are exempt from taxation in Spain? Expatriate concessions Are there any concessions made for expatriates in Spain? The expatriate has not been a Spanish resident during the 10 tax years prior to the assignment to Spain.
The assignment to Spain is derived from a labor contract excluding professional sports- persons or from acquiring a board of director position in an entity with no participation in its share capital or in a percentage which does not imply being a related party. The taxpayer does not obtain income that would qualify as being obtained through a permanent establishment situated in Spain.
It is limited to 30 percent of the tax payable on the total employment income received in the fiscal year The 24 percent non-resident rate will only be applicable to taxable employment income up to EUR, while any employment income exceeding that amount will be taxable at the marginal rate applicable to tax residents 47 percent as of Salary earned from working abroad Is salary earned from working abroad taxed in Spain?
If so, how? Services are physically rendered out of Spain for the benefit of a non-resident company or a permanent establishment located abroad. The income that may benefit from this exemption has an annual maximum limit of EUR60, Eventual tax treaty provisions should also be considered. Taxation of investment income and capital gains Are investment income and capital gains taxed in Spain? Dividends, interest, and rental income As a general rule, investment income, such as dividends and interest arising from bank deposits, any gains on sales of shares, and so on, obtained by a Spanish tax resident will be taxed at a rate of 19 percent for amounts up to EUR6,, 21 percent for income in an amount between EUR6, and 50,, 23 percent for income in an amount between EUR50, and EUR, and 26 percent for amounts exceeding EUR, Gains from stock option exercises Although taxation may vary depending on the conditions of the plan, as a general rule the gain on exercise difference between fair market value of the stock at exercise and the exercise price is subject to income tax, as work income, at ordinary progressive rates provided that the options are non-transferable.
Principal residence gains and losses As a general rule, transmission of habitual residence is subject to a rate of 19 percent for amounts up to EUR6,, 21 percent for income in an amount between EUR6, and 50,, 23 percent for income in an amount between EUR50, and EUR, and 26 percent for amounts exceeding EUR, Capital losses Capital losses deriving from the transfer of assets could be compensated with the capital gains obtained in the same year.
Personal use items Personal use items do not produce capital losses. Gifts The donor is subject to taxation on the eventual capital gain connected to the donated asset. See previous mention. Are there capital gains tax exceptions in Spain? Pre-CGT assets Information is not available. Deemed disposal and acquisition Information is not available.
General deductions from income What are the general deductions from income allowed in Spain? Social security contributions paid by the employee will be deductible from their gross work income provided that they are compulsory and directly connected to the work performed in Spain.
Personal and family minimum. Personal Minimum: EUR5, increased if the taxpayer is older than 65 or disabled. Family minimum: EUR1, for each ascendant older than 65 that lives with the taxpayer subject to certain requirements increased to EUR2, in case the ascendant is older than 75 ; EUR2, for the first descendant that lives with the taxpayer, EUR2, for the second, EUR4, for the third, and EUR4, for the fourth and each additional child.
An additional minimum of EUR2, applies if the descendant is younger than 3. The deductible amount for personal and family minimums is calculated applying the PIT progressive scale to the above-mentioned amounts, in practice, for many occasions, a tax credit of 19 percent of that amount.
Individuals with net employment income up to EUR13, can reduce from their taxable base an additional amount of EUR5,, while those with net employment income between EUR13, and EUR16, can reduce from their taxable base an additional amount of EUR5, minus the result of multiplying by 1. Tax credits Main tax credits available are the following: A 15 percent deduction of the investment made in the acquisition or refurbishment of the habitual residence maximum investment EUR9, A transitory regime is available.
A potential transitory deduction is foreseen for the rental of habitual residence for those contracts subscribed before 1 January Deduction for charitable donations 10 percent of the donations made in favor of foundations legally recognized, and associations declared to be of a public interest. The maximum effective tax rate on net income was 90 percent.
Last law to change rates was the Individual Income Tax Act of Defense tax of 10 percent of normal tax and surtax limited to 10 percent of excess of net income over sum of normal tax and surtax. Tax liability reduced by 1 percent by Joint Resolution of Congress, No. Last law to change rates was the Tariff Act of October 3, This decision stood until the ratification of the 16th Amendment in Declared unconstitutional by the Supreme Court in in Pollock v.
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