Minimums for tax

Hi, can anyone tell me what the minimums are before tax is payable in Spain

For 2010 it was €5151 or €6069 if you were over 65 or €7191 if you were over 75.  There are also allowances if you have kids or dependent parents living with you. 

Can this be updated to this tax year please and what percentage is paid on say 10k.

Even if you are under the income level to pay tax, unless you are employed and thus your employer shows you on the tax return, you MUST make a return.   Most years I do not need to pay tax but I make my annual return as required by Spanish law

http://www.deloitte.com/view/en_GX/global/services/tax/7652bd513f9a4310VgnVCM1000001a56f00aRCRD.htm

Deductions and allowances

Deductions and allowances are available. The "Minimo Personal y Familiar" is the tax-free allowance. Any allowance not used against the general income can be set against the savings income.

The basic personal allowance for 2012 is €5,151 per person. For joint returns the allowance given to the first spouse is €5,151 plus €3,400 for the second spouse. A single parent gets €5,661. The basic allowance is increased by €918 for someone aged 65 or more (so €6,069 in total) and by a further €1,122 for someone aged 75 or more (€6,273 in total). The personal allowance (including additions for age, dependants and incapacity) is not deducted from taxable income but is given as a tax credit against the total tax payable.

Note that the allowances are not given as a deduction against income (as in the UK), but instead are given as a tax credit against the total tax payable. The amount of credit is calculated by taking the total personal allowance and multiplying this by the scale rates of tax, starting with the lowest rate first.  It is then deducted from the taxpayer’s total tax payable for the year.  This has the effect of relieving tax not at the taxpayer’s marginal rate, but first at the lowest rate of 24.75% rate, and then at the higher rates where applicable.

Note that the allowances are not given as a deduction against income (as in the UK), but instead are given as a tax credit against the total tax payable. The amount of credit is calculated by taking the total personal allowance and multiplying this by the scale rates of tax, starting with the lowest rate first.  It is then deducted from the taxpayer’s total tax payable for the year.  This has the effect of relieving tax not at the taxpayer’s marginal rate, but first at the lowest rate of 24.75% rate, and then at the higher rates where applicable.

Poppyseed. Maybe I am not thinking straight today but I find that confusing.  From what I understand , in that case my tax consultant got it wrong and I should have paid some tax.

Be grateful if you would give an example of how it works, say for someone making a joint tax return. with a joint income of say 20K

  Thanks

Johnzx, I have no idea I am not an expert on the Spanish tax system and only know as much as I can find and try and interpret on the internet! However, in my totally unqualified opinion I think your tax consultant is correct, the tax liablilty for 20,000 is less than the allowances so no tax is due. But as we all know tax is taxing and a very complicated subject in any country so I would only take the advice of someone qualified to give it. The info I posted was just  to show the tax rates and personal allowances for 2012.

 The Spanish Tax system is constructed in a different way to the UK system. You have at first what seems to be a very low personal allowance which is increased by other allowances dependent on age and whether the income is earned or unearned. So for a 65 year old with just a State pension there is no tax payable. Private pensions are also treated very favorably if you personally have purchased the annuity.

At 65 you have the basic allowance of circa €6000 and the earned income (includes pensions) of circa €5000 giving a total of around €11000 euro berfore you have tax to pay. If you have disabilities you can have additional allowances and if you have dependent parents or children living with you there are yet more allowances.

This not doubled for a married couple but it does increase if you choose to be taxed as a couple. This is another big difference with UK you can do your tax return online as two single people as a first test then try a combined return and choose the one that suits you to pay least tax. You do this on a Tax office programme that you can download called PADRE.

We are now in our third tax return year. The first year 2009 Padre gave us zero tax to pay singley but a small amount as a couple we chose singley. 2010 was the reverse if we went as singles Kath would have paid 5c so we went as a couple. This year much to my surprise the tax office sent us pre-completed returns showing no tax to pay on either so we signed them and returned them to the tax office personally. Here is another quirk having prepared the return you can take it to your bank they will deduct the tax payable and send the tax and forms on to the Tax office. However if you have no tax to pay the bank will not take the papers and submit them, you take them into the tax office they date stamp both copies give you yours back and file theirs.

Even if you do not need to pay tax it is most important to be registered and submit nil returns so that as a resident you can take advantage of the allowances available to tax residents for CGT and Succession Tax after 5 years returns.