During the months of April to June, fiscal representatives around the Spain are very busy. This is the time of year when the Spanish resident tax declarations are completed. If you are over a basic threshold then you are required to complete an annual tax declaration in Spain as a resident before June 30th each year. On this form you declare all your world-wide income including rental income, income from pensions and other investments and interest.
The threshold for people to make the Spanish resident tax declaration varies according to the level of personal allowances and the number of sources of income. If you only have one income source then you may not have to make a declaration at all.
Even if you are not required to complete the form by law, presenting an annual resident tax declaration is a valuable way of ensuring that you are eligible for a certificate of fiscal residency – a very useful paper to have. Being able to prove your fiscal residency in Spain means that you can benefit from lower rates of taxation when it comes to inheritance and capital gains. So, it might be beneficial to present one but is it a difficult process?
‘It’s usually much more straight forward than people think,’ explains Natalia Mozgunova, ‘For those residents who are already clients, there is relatively little to bring to the office and most of the information can be accessed online. So, for example, we have access to bank accounts and previous declarations.”
Natalia is one of the six multi-national tax advisors at Ábaco. Based on the fifth floor she and her colleagues are preparing and sending Spanish tax returns to make sure that everyone’s declaration is presented before the 30th June, ‘The appointment takes about half an hour and is usually quite straightforward. It’s done online now and we can tell our clients by the end of the appointment whether they have tax to pay, a nil return or even if they have overpaid tax to collect.’
One of the main confusions can be around the different Spanish tax years. In Spain the tax year is from January to December and the June tax return refers to income from the previous year. 'So, for the tax returns for June 2013 we need bank statements spanning the period January 1st 2012 to December 31st 2012. That can be confusing for people at first,' explains Natalia.
In some cases people will even be due a refund, 'The Spanish Tax Authority must return any overpaid tax within 6 months and if you've made your declaration in good time it can come through quite quickly. If you are entitled to a refund it will be paid directly into your bank account.'
There have been some cases where people have received emails supposedly from the Spanish Tax Authority. Natalia warns, 'These are not genuine emails but attempts to get your bank details from you for fraudulent purposes. The Spanish Tax Authority never notify you of a rebate this way and they would never ask you to enter your credit card details.'