TAXES AND RATES
A tax is a type of public income or public patrimonial benefit, required of individuals.
Taxes are a type of tax that is established by law and is required by the taxpayer witout compensation, that is, without receiving any benefit in return.
The event that, when it occurs, gives rise to the birth of the obligation to pay the tax, is made up of businesses, acts or events that demonstrate the economic capacity of the taxpayer, for example, their income, their assets or an expense.
Taxes are one of the main ways that the State uses to obtain income to support public spending.
There are several criteria for classifying taxes, although the best known is the one that differentiates between direct taxes and indirect taxes.
* Direct taxes are those that directly tax people (physical or legal) for obtaining income (such as personal income tax) or for owning assets (such as wealth tax).
* Indirect taxes are those that tax indirect manifestations of the economic capacity of taxpayers. The clearest example is VAT, Value Added Tax, which taxes goods and services consumed by families.
Taxes are taxes paid by citizens as a result of carrying out an administrative action that benefits them individually, but which they are obliged to request or receive (for example: garbage collection or the issuance of ID cards).
The Heritage Declaration Tax in Spain is levied on the net worth of individuals, which is calculated as the value of the taxpayer´s assets after deducting all their liabilities, that is, their debts as of December 31 of each year. It is declared in the same period as the income tax return, between April and June of each fiscal year.
The Heritage Declaration Tax is a declaration of assets, not income. What is taxed is what you have, not what you have earned in the year.
Individuals resident in Spain and non-residents who own assets or rights located in Spanish territory are required to file the Heritage Declaration Tax.
Taxpayers whose value of assets and rights calculated according to the regulations of the same is greater than 2,000,000 euros will have to file the tax. The minimum exemption from this tax is set at 700,000 euros and the first 300,000 euros of the value of the habitual residence are not taxed either.
The Non-Resident Tax (IRNR) is a direct tax levied on income obtained in Spanish territory by individuals and entities not resident in Spain, for example, from rentals or sales of properties in Spain or investments.
They must also declare the imputation of income from non-rented Spanish properties.
The Declaration for Non-Residents will be at a tax rate between 19% and 24%, depending on the type of income and country of residence.
The Income Tax Return or IRPF (Personal Income Tax) is an annual procedure that residents in Spain are required to complete in order to regularize their situation with the Tax Agency.
However, not everyone has to do it, since it depends on the income obtained throughout the year.
Since tax violations entail fines that can be significant, knowing when and in which cases it is mandatory to file the return is essential to avoid unexpected expenses that may affect our financial health in the future.
The Tax on Legal Documents (AJD), also known as the mortgage tax, is calculated on the deed made public before a notary and is applied to the legalization of all types of notarial, commercial and administrative documents.
This means that in the case of a home purchase-sale, this tax will tax both the deed of sale and the mortgage.
The Gift Tax occurs when there is a transfer of assets and/or rights from one physical person to another, in this case "inter vivos" (between living persons) and free of charge. What we know as a donation.
Any increase in assets obtained by donation (free of charge) is subject to this tax.
In Spain, the collection, verification and management corresponds to the autonomous communities, so the differences affect both the tax rates, possible deductions or minimum exemptions.
The tax must be declared by physical persons who receive the assets and rights free of charge. Legal persons will not have to file a declaration for the Gift Tax, in which case the donation will be taxed by the Corporate Tax.
Inheritance Tax is levied when there is a transfer of assets and/or rights from one natural person to another, in this case "mortis causa" (due to death) and free of charge. What we know as an inheritance.
Any increase in assets obtained by inheritance or legacy (free of charge) is subject to this tax. It includes life insurance, provided that the person who has died is the insured.
In Spain, the collection, verification and management corresponds to the autonomous communities, so the differences affect both the tax rates, possible deductions or minimum exemptions.
There are two types of taxpayers or taxpayers who are obliged to pay inheritance tax:
* The heirs.
* The beneficiaries of life insurance (since they may be different from the heirs).
The Property Transfer Tax (ITP) is a tax levied on the transfer of property from one person to another.
It is not a tax that is applied annually or quarterly, it is not temporary. It is accrued once the taxable event that gives rise to the obligation to pay the tax has occurred.
When we buy real estate, we have to legalize and register the deed. This process begins once we have gone through the notary process. To legalize the deed we must pay the Property Transfer Tax and subsequently register it in the corresponding Property Registry.
