Spain

Taxable period

The tax year is generally the calendar year.

Tax returns and payment of tax

As a general rule, Spanish tax returns should be filed and paid between 11 April and 30 June following the end of the tax year. The period for declaring and paying PIT is established annually by a ministerial order. It usually ends on 30 June.

In general, a PIT return should be filed by a person resident in Spain whose gross employment income exceeds EUR 22,000 (for joint and separate returns) during the calendar year or EUR 15,000 for taxpayers who obtain employment income from more than one payer if the amounts obtained by the second and subsequent payers exceed EUR 1,500. Persons resident in Spain are also required to file a tax return if they obtain other personal incomes in excess of certain amounts specified by law.

Individual taxation is the basic way of being taxed for PIT, but the members of family units may opt to be taxed jointly in accordance with the following rules:

• Family units composed of non-legally separated spouses and, if any:
  • Minor children, unless, with the consent of their parents, they live independently.
  • Disabled adult children judicially subject to extended or rehabilitated custody.
• In cases of legal separation, or when there is no marriage bond, family units formed by the father or mother and all children living with either of them who meet the above requirements.
• A person may not form part of two family units at the same time.
• Members of the family unit are determined in accordance with the family situation at 31 December each year.

Non-residents are taxed on an individual basis and cannot opt to be taxed jointly. Income not obtained through a PE is taxed on each individual total or partial accrual of taxable income.

Withholdings on personal income

Withholdings are levied on employment income at the progressive tax rates established (see the Taxes on personal income section for further information).

For income generated from professional activities, the general rate of withholding is 15%, with certain exceptions.

The same withholding rates will apply to earned income generated from teaching courses, conferences, symposia, seminars, and the like, or from the production of literary, artistic, or scientific work, provided that the right to trade on such works is transferred.

In both cases, the withholding rates will be reduced by 50% if income qualifies for the tax credit for income obtained in Ceuta and Melilla.

Withholdings at the rate of 19% are also levied on the following:

• Income from capital.
• Capital gains generated from transfers or payments of shares of joint investment institutions.
• Capital gains generated from forest use or exploitation by persons residing in public woodland which are established in the regulations implemented under Spanish PIT law.
• Prizes awarded in games, competitions, lotteries, or promotional draws, whether or not they are linked to the offer, promotion, or sale of certain goods, products, or services not subject to special tax on gaming income.
• Income generated from leases or sub-leases of urban real property.
• Income generated from intellectual or industrial property, provision of technical assistance, leases or sub-leases of movable property, businesses, or quarries.

Withholdings are levied on employment income obtained by directors and members of boards of directors or boards or committees representing such directors, and other representative bodies at the rate of 35% (19% for companies whose turnover in the previous tax year was less than EUR 100,000).

The withholding rate on amounts allocated to transfers of image rights by PIT payers who have an employment relationship with a person or company/entity is 19% if the taxpayer has transferred to such person or company/entity the right to trade on or the consent or authorisation to use one's image in acts with persons or companies/entities resident or not resident in Spain. The withholdings for other transfers of image rights is 24%.

Prizes on lotteries and games are subject to a 20% withholding or advance payment of the special tax on gaming income.

Withholdings are credited against the total tax due.

EUR 1,000 limit on cash payments

Payments in cash over EUR 1,000 are not allowed for transactions in which at least one of the parties is a person carrying on a business or professional activity, and fines of up to 25% of the amount are payable by both the payer and the recipient of these cash payments.

Obligation to disclose assets located overseas

Law 7/2012 introduced the obligation to disclose assets such as accounts, shares, or real estate located overseas. Severe fines were envisaged (a minimum of EUR 10,000) for breaching this obligation.

In addition, assets regarding which the information disclosure obligation is not met within the established period are treated as unjustified capital gains for PIT payers and allocated to the earliest tax period of those which are not statute barred. Breaches of the obligation to declare this income used to be very serious infringement and fines of 150% of the gross tax liability were imposed.

However, in January 2022, the European Court of Justice (ECJ) concluded, after some years of uncertainty in relation to the above penalty system, that such a system was against EU law.

Consequently, the Spanish tax system was updated, reviewing and considerably reducing the previous established penalty system.

Order HFP/886/2023, of 26 July 2023, that came into effect on 27 July 2023, brought in the obligation to report cryptocurrencies located overseas, through tax form 721. The deadline for reporting cryptocurrencies located overseas owned by the taxpayer in tax year 2023 is 1 January 2024 to 31 March 2024.

Tax inspections

The Spanish tax authorities has a department for tax inspections that is responsible for, amongst other things, verifying that tax obligations are correctly complied with and, if necessary, for adjusting the taxpayer's tax situation by issuing one or more tax assessments.

As part of its responsibilities, the tax inspection department may investigate taxpayers to see if any facts regarding tax obligations have been ignored by the tax authorities or check the accuracy of filed tax returns.

The tax returns examined by the tax inspection department are chosen on the basis of different criteria (randomly, due to differences of income or capital gains detected by comparing the returns of different taxpayers, significant differences of wealth declared in two consecutive years, or external signs of wealth such as acquisitions of residential properties, luxury cars, financial assets, or leisure vessels for significant sums of money).

If taxpayers disagree with a tax assessment issued by the tax inspection department as a result of a tax inspection, they may file an appeal firstly with the economic-administrative tribunal, and if the appeal is not upheld by the tribunal, with the ordinary courts.

If taxpayers have paid incorrect amounts of tax, they may claim a refund of the tax paid in excess from the tax authorities within the statute of limitation period (four years) by means of a special proceeding that commences with the filing of a request with the tax authorities.

Statute of limitations

The statute of limitations for taxes is four years in Spain commencing from the day following the termination of the voluntary tax filing period.

This four-year period may re-start for a taxpayer if the tax authorities carry out any actions or proceedings, with the formal acknowledgement of the taxpayer, to acknowledge, adjust, review, inspect, guarantee or collect all, or any part of a tax obligation, or due to actions by the taxpayer such as the filing of a new or late tax return that alters or rectifies a previous tax return or the filing of an appeal or claim regarding the tax.

Topics of focus for the tax authorities

Every year the Spanish tax authorities issue general guidelines on the authorities’ annual tax and customs control plan. These guidelines identify areas where the tax authorities intend to adopt a greater role of verification, inspection, and monitoring during a certain tax year.