Income and Wealth tax. Tax forms 100 and 714.
The Income and Wealth Tax are taxes that people must submit, not companies.
As you will see below, only some are required to file these taxes, especially the 714 Wealth Tax form.
What are the key dates?
The deadline for filing Personal Income Tax (IRPF) and Wealth Tax usually starts the first or second week of April and ends on June 30 (*).
The deadline to file direct debit payment of these taxes is June 27.
As the starting date in April always coincides with the deadline for submitting taxes for the first quarter, in my case, I start preparing forms 100 and 714 at the end of April or the beginning of May.
FORM 100. INCOME TAX.
In the income tax, also known as “Declaración de la Renta”, the annual taxes to be paid for each person are calculated, considering all their income, their family situation and possible state or regional deductions. All IRPF payments made during the year are deducted from the amount to be paid.
For married couples, it is possible to file a joint return, always comparing whether it is more beneficial to file individual returns or the joint option.
• Who is required to submit the Income Tax? All people who are tax residents in Spain, both employees and self-employed. Employees must exceed certain income limits to have an actual obligation to submit the income tax. However, it is always important to check if there is a possibility of receiving a tax refund when it is not mandatory to submit Form 100.
• What is considered a tax resident in Spain? When a person lives more than 183 days a year in Spain or has his centre of economic and vital interests in Spain: his family residing in Spain or receiving the vast majority of income in Spain.
• What income is declared in the Income Tax? Total worldwide income must be reported, not only those from Spain. All revenue received as an employee, work performed as a freelancer, financial income and capital gains.
• How is the Income Tax calculated? The tax base for calculating the taxes to be paid comprises the general and savings tax bases. Depending on where each person lives, taxes can be paid more or less. Each region in Spain has its income tax tables and regional deductions, representing approximately 50% of the amount to be paid in taxes.
• How is the Income Tax filed online? The personal page of Form 100 can be accessed in several ways:
1) With a personal digital certificate.
2) With ‘Clave Pin’.
3) With a reference.
The first two cases are straightforward, but there may be more problems with the third option. The reference is obtained in turn from different options depending on each case:
1) DNI number + DNI expiration date + Box 505 of the last Income Tax
2) NIE number + NIE support number + Box 505 of the last Income Tax
3) If the previous year the taxpayer did not file the Income Tax, alternatively, the option to enter the last five numbers of a bank account in Spain will appear.
This bank account must be in your name, with the same DNI/NIE used to access Form 100, and it was operational before December 31.
Obtaining the spouse’s reference is essential to compare the individual and joint declaration options.
• How is the Income Tax paid? There are different options for paying the Income Tax. In addition to the most common, such as payment by direct debit or online payment through NRC, income has a peculiarity compared to other taxes, which is the possibility of making the payment in two instalments without interest:
– 60% of the amount to be paid on June 30.
– 40% of the amount to be paid on November 5.
There is also the option of requesting an ordinary payment deferral (total or partial) to pay the income tax in a maximum of 12 due dates.
FORM 151. INCOME TAX ‘BECKHAM LAW’.
For workers included in the special regime for displaced workers, better known as the Beckham Law, Form 151 is used to settle their annual taxes. Both the deadlines and the operation to make the presentation coincide with those of Form 100.
FORM 714. WEALTH TAX.
Unlike the income tax, the wealth tax is not calculated according to the income that has been had in the year but by the value of the properties, investments and assets that people have.
• Who is required to submit the Wealth Tax? Form 714 is aimed at both tax residents in Spain for the total of their assets worldwide and non-tax residents for the value of their assets in Spain. It is a tax whose collection is ceded to the Autonomous Communities. For this reason, each region has its minimums that determine the obligation to present the tax and even payment exemptions. Generally, people with more than 700,000 euros tax base must submit the Wealth Tax. Still, some communities, such as Catalonia (€500,000) or Valencia (€600,000), have a lower amount for the taxpayers to be obliged to submit Form 714.
• How is the tax base of the Wealth Tax calculated? The tax base results from adding the person’s total assets and subtracting the deductible debts.
– Assets: For example, homes, premises, land, bank accounts, deposits, shares, investment funds, life insurance, temporary and life annuities, and cryptocurrencies.
– Debts: The most common would be negative balances in bank accounts, the amount to be paid on the income tax or any personal loan.
Any asset or investment with more than one owner will be charged for the amount corresponding to its ownership percentage.
The value of the habitual residence is exempt up to a maximum of €300,000.
• How is the submission and payment of the Wealth Tax processed? To access Form 714, you can use the same means of identification as with the Income Tax.
For the regions of Madrid and Andalusia, there is a 100% exemption of the amount to be paid. That exemption means that the Wealth Tax must be calculated, indicating its total exemption, and submitted with an amount payable of zero euros.
Direct debit and online payment through NRC are allowed for the rest of the Autonomous Communities. Unlike the Income Tax, the Wealth Tax does not allow payment in two instalments, although requesting an ordinary payment deferral is possible.
(*) If June 30 falls on a Saturday/Sunday, the payment date will be Monday. For example, in 2024, the term will end on July 1.
