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Publication date: 29/12/2021

Personal income tax will be filed in Spain between April and June of next year

ARCHIVED – Ways to pay less tax on your income statement in Spain” style=”margin: 5px 10px 5px 0px; float: left” width=”100%” />

There are still a few months until the personal income tax is filed in Spain for the year 2021, but financial experts have already offered some tips and tricks that could result in substantial savings for taxpayers in the next declaration. The annual payment will be due between April and June 2022, but there are still several ways to save a euro or two before the ball drops this year.

Contributions to the pension plan

In 2021, the maximum contribution a taxpayer can deduct is 2,000 euros in total, provided that this amount does not exceed 30% of the overall economic income for the year.

The contributions paid to pension plans reduce taxable income from personal income tax, so in an example where a taxpayer earned 30,000 euros in the year, assuming he paid the maximum contribution of 2,000 euros, the amount to pay will only be applied against the remaining 28,000 rather than the entire income.

Knowing that the tax rate is 30%, the saving in this case would amount to 600 euros, and the more you earn, the more you save.

Until last year, the maximum allowable pension contribution was €8,000 and this is set to be further reduced in 2022 to just €1,500, so now is a good time to max out the annual plan.

Invest in start-ups

The government allows 30% of the amount invested in shares of newly created companies to be deducted, up to a maximum of 60,000 euros.

Offsetting losses against gains

If you invest in the stock market, mutual funds or cryptocurrencies, the Treasury allows you to offset the losses against the gains that have been amassed during the year.

It is therefore a good idea to sell at the end of the year and thus save on the 19-26% tax rate applied to the net amount of capital gains realized during the year.

Work abroad

People who perform work for a non-Spanish company or a business abroad may be exempted up to 60,100 euros per year. The exempted income depends of course on the number of days during which the worker was posted abroad.

Liquidate part of the mortgage payment

For those who bought a house in Spain before January 1, 2013, up to 15% of what was paid on the mortgage in 2021 can be deducted, up to a maximum of 9,040 euros.

Those who have made lower mortgage repayments during the year can take advantage of this tax advantage by amortizing part of the loan on a habitual residence.

Selling a Habitual Residence

In the case of having sold the main residence this year, it will be possible to avoid paying capital gains tax (tax rate between 19-26%) if the amount obtained is reinvested in whole or in part, within two years, in another accommodation which will be considered as a principal residence.

Deductions for donations

Donations made to non-profit organizations allow a deduction of up to 80% on the first 150 euros. The remainder of the donation can be deducted by 35%, unless donations of the same amount have been made in the last two years to the same organization, in which case the amount of the deduction will increase to 40%.

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