Taxation of the Spanish rentals economic aids: a bitter candy?
Friday, July 31, 2009 @ 10:55 AM
I would like to make some comments on the taxation on these aids approved by the Spanish Government by Real Decreto 1472/2007.
But first let us make a small introduction of how the Spanish Income Tax works.
This tax is one of those called progressive: this means that the more you earn, the more you pay, but there are some kind of incomes (like capital gains) that are aside this rule and its taxation is fix, in this case an 18%, doesn´t matter how much you might earn.
The taxation of the rental aids granted by the Government is absolute, there is no exemption on them, and their taxation is not fixed on the 18%, but on the general scale of the Income Tax.
There are other aids forseen on the Income Tax regulation that have no exemption but at least the law allows you to fractionate in several years their imputation, so you avoid the harm effect of having all the revenue imputed in one year. There is not the same to impute 8.000 € in one year, that imputing 2.000 €, 2.000 € 2.000 € and 2.000 € You pay much less tax this last way.
The rental aids granted by the Government have no exemption, have no fixed tax rate and have no way to impute them in several years, so those people that have applied for them and become victims of the lateness of the Spanish bureaucracy might have a very nasty surprise if they apply for these aids by mid of 2008, and have them granted during year 2009, because they will have to add to the aids corresponding year 2009, the ones corresponding year 2008, so their taxation will increase considerably
These aids are quite interesting, but they might end up having a bitter taste.
Antonio Robles Jara
Abogado y asesor tributario