Tax returns and compliance

By: Josep Navarro

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

The due date for filing the tax return and making a payment is normally from 1 May to 30 June of each year for the income obtained in the previous year. Specific filing deadlines apply to non-residents. If the tax return is not filed on time, penalties will be imposed. These penalties will vary depending on whether the tax return is filed after the deadline on a voluntary basis or whether it is as a result of a tax inspection.

What is the tax year-end

31 December. 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. The withholdings are made in accordance with a previous estimation of the final tax due. If the employees work for a Spanish related company or permanent establishment in Spain of the non-resident company, the withholdings on account must be made by the Spanish entity or permanent establishment for which the employee works

The withholdings are calculated according to a progressive scale based on the amount of taxable income that is expected to be paid during the tax year (both cash and kind remuneration must be considered) and the family status of the employee. If said circumstances were modified during the tax year, a new calculation shall be made.

These withholdings are paid to the Spanish tax authorities on a monthly or quarterly basis and will be deducted from the final tax due. If the total amount of withholdings were to exceed the tax due, the tax authorities would have to refund the difference. After deducting withholdings, the tax due is paid on the filing of the tax return. However, the taxpayer can choose to pay 60 percent of the tax due when the return is filed and the remaining balance in November.

Withholding obligations in the case of non-resident entities have to be checked on a case-by-case basis.

Those individuals engaged in independent or business activities must make certain prepayments of the final tax throughout the year.

Non-residents

In general, are taxed at flat rate on income obtained in Spanish territory or which arises from Spanish sources, at the general rate of 24.75 percent for work income and at the rate of 21 percent on capital gains and investment income arising from Spanish sources. This rates are applicable for year 2012 and 2013. Specific rates apply to certain other type of income.

Withholdings on work-income to non-residents are applied at a general rate of 24.75 percent.

Payers of Spanish-source income are usually able to withhold the tax at source on each payment made.

Expatriates in Spain