Joint Tax Return Option in Cases of Legal Separation or No Marriage with Shared Child Custody

To opt for joint taxation in cases of legal separation or where the parents are not married and share custody of their children, the parents must reach mutual agreement before exercising the option.

Where the parents are legally separated or have no marital relationship and share custody of their children, if there is no proof of mutual agreement between the parents as to which of them will file jointly—and that agreement must be reached before the tax returns are filed—both parents and all the children must file individually. This follows from the mandatory wording of Articles 82(1)(2) and 82(2) of the Personal Income Tax Law (LIRPF). In these circumstances, the €2,150 reduction under Article 84(2)(4) of Law 35/2006 of 28 November does not apply. This is the ruling issued by the Central Economic-Administrative Tribunal (TEAC) on 19 July 2024.

Summary of the reasoning:

Where legally separated spouses have minor children and share custody, if they do not mutually agree on this point, the €2,150 reduction under Article 84(2)(4) of the Personal Income Tax Law is lost.

This outcome follows from the mandatory application of Articles 82(1)(2) and 82(2) of the Personal Income Tax Law. In the Tribunal’s view, however, it is far from satisfactory, particularly because at least two alternative solutions could be considered.

The first alternative would allow each former spouse, in shared-custody cases, to claim half of the reduction (50%), or €1,075 each.

The Tribunal is not saying that, under this first alternative, both former spouses should be entitled to file a joint return. Its proposal is that both parents file individually, as do each of the children, while each former spouse is allowed to claim half of the reduction, or €1,075.

This alternative is considered fairer because:

1. The tax benefit is relatively small.
2. The tax benefit has been retained on grounds of fairness, as stated in the preamble to Law 35/2006.
3. When applied under the terms of Article 84(2), the reduction is more beneficial to family units with lower incomes, as the preamble also explains.
4. For other Personal Income Tax reductions to which several people are entitled, Law 35/2006 provides for apportionment (Article 61(1)).

The principle of “justice” in taxation is reflected both in the Spanish Constitution (Article 31(1)) and in the General Tax Law (Article 3(1) of Law 58/2003).

The second alternative would be to create an exception to the rule that a person cannot belong to two family units at the same time—a restriction under Article 82(2) of the Personal Income Tax Law. This would allow both former spouses to file jointly and each to claim half of the reduction, or €1,075. The Taxpayer Advocate Council (CDC) also put forward this alternative in Regulatory Proposal 1/2021, concerning reform of the joint taxation reduction under Article 84(2)(4) of the Personal Income Tax Law in divorce cases involving shared custody.

These alternatives are proposals for future legislation (lege ferenda). They would have to be introduced by the legislature; the Tribunal considers that it cannot reach them by interpreting the rules currently in force.

It must therefore be concluded that where legally separated spouses have minor children and share custody, if the former spouses do not mutually agree otherwise, both parents must file individually.