Tax period

The tax period is usually the calendar year.

Tax returns and payment

As a general rule, Spanish income tax returns must be filed and paid between April 11 and June 30 following the end of the fiscal year. The period for reporting and filing personal income tax is established annually by ministerial order and usually ends on June 30.

In general, a person resident in Spain whose full income from work exceeds 22,000 euros (for joint and separate returns) during the calendar year or 15,876 euros for taxpayers who obtain income from work from more than one payer if the amounts obtained by the second and subsequent payers exceed 1,500 euros, must file the personal income tax return. People resident in Spain are also required to file an income tax return if they obtain other income from personal work above certain amounts specified by law.

Individual taxation is the basic form of personal income tax, but members of family units can choose to tax jointly according to the following rules:

• Family units composed of spouses who are not legally separated and, where appropriate:

• Minor children, unless, with the consent of their parents, they live independently.
• Disabled adult children who are judicially subject to extended or rehabilitated parental authority.

• In cases of legal separation, or when there is no marriage bond, family units formed by the father or mother and all the children who live with any of them and who meet the above requirements.
• A person cannot be part of two family units at the same time.
• The members of the family unit are determined based on the family situation as of December 31 of each year.

Non-residents are taxed individually and cannot choose to tax jointly. Income not obtained through a permanent establishment is taxed on each total or partial individual accrual of the tax base.

Withholding on income from work

Withholding is made on income from work at established progressive tax rates (for more information, see the Personal Income Taxes section).

For income generated by professional activities, the general withholding rate is 15%, with some exceptions.

The same types of withholding shall apply to income from work generated by the provision of courses, conferences, colloquiums, seminars and the like, or by the preparation of literary, artistic or scientific works, whenever the right to exploit them is ceded.

In both cases, withholding rates will be reduced by 50% if incomes are entitled to the deduction for income earned in Ceuta and Melilla.

Withholding taxes at the rate of 19% are also applied on the following items:

• Returns on movable capital.
• Capital gains generated by transfers or payments of shares in collective investment institutions.
• Capital gains generated by forest use or exploitation by people living in public forests that are established in the regulations implementing the Personal Income Tax Act.
• Prizes awarded in games, contests, lotteries or promotional sweepstakes, whether or not linked to the offer, promotion or sale of certain goods, products or services not subject to the special tax on gaming income.
• Income generated by leases or subleases of urban real estate.
• Income generated by intellectual or industrial property, provision of technical assistance, leases or subleases of movable property, businesses or quarries.

Withholding is made on income earned by directors and members of boards of directors or of boards or committees representing such directors, and other representative bodies, at the rate of 35% (19% for companies whose turnover in the previous fiscal year was less than 100,000 EUR).

The withholding rate on amounts allocated to transfers of image rights by taxpayers of personal income tax who have an employment relationship with a person or business/entity is 19% if the taxpayer has assigned to that person or business/entity the right to trade or the consent or authorization to use their image in acts with individuals or businesses/entities resident or not resident in Spain. The retention for other transfers of image rights is 24%.

Lottery and gaming prizes are subject to a withholding or account deposit of 20% of the special tax on gaming income.

Withholding is charged to the full amount of the tax.

Limit of 1,000 euros for cash payments

Cash payments in excess of 1,000 euros are not allowed in transactions in which at least one of the parties is a person who carries out a business or professional activity.

Both the payer and the recipient of these cash payments must pay fines of up to 25% of the amount.

Obligation to disclose assets located abroad

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

In addition, assets for which the reporting obligation is not fulfilled within the established period are considered unjustified capital gains for personal income tax payers and are charged to the oldest tax period of those not prescribed. Non-compliance with the obligation to declare these incomes tended to be very serious violations and fines of 150% of the full contribution were imposed.

However, in January 2022, the Court of Justice of the European Union concluded, after some years of uncertainty in relation to the previous sanctioning regime, that this regime was contrary to EU law.

As a result, the Spanish tax system was updated, revising and considerably reducing the previously established sanctioning regime.

Order HFP/886/2023, of July 26, 2023, which came into force on July 27, 2023, introduced the obligation to declare cryptocurrencies located abroad, through tax model 721. The deadline for declaring cryptocurrencies located abroad owned by the taxpayer in fiscal year 2023 is from January 1, 2024 to March 31, 2024.

Tax inspections

The Spanish Tax Agency has a tax inspection department that is responsible for:

• Check the correct compliance with tax obligations.
• Regularize the taxpayer's tax situation by issuing tax acts, if necessary.

This department can:

• Investigate taxpayers to verify if any facts related to tax obligations have been ignored.
• Check the accuracy of the tax returns submitted.

The income statements being examined are selected based on several criteria, such as:

• Random selection.
• Differences in income or capital gains detected when comparing the returns of different taxpayers.
• Significant differences in declared assets in consecutive years.
• External signs of wealth, such as acquisitions of residential property, luxury cars, financial assets or recreational boats for significant sums of money.

If taxpayers do not agree with a tax settlement issued by the tax inspection department, they can file an appeal: First of all, to the economic-administrative court. If the appeal is not considered, before the ordinary courts.

Taxpayers who have paid incorrect amounts of taxes can claim the refund of overpaid taxes within the statute of limitations (four years), through a special procedure that begins with the filing of an application with the tax authorities.

Prescription

The statute of limitations for taxes in Spain is four years, starting the day following the end of the voluntary tax filing period.

This deadline can be resumed if:

The tax administration performs any action or procedure to recognize, regulate, review, inspect, guarantee or collect all or part of a tax obligation, with the formal recognition of the taxpayer.

The taxpayer carries out actions such as:

• Filing a new or overdue tax return that modifies or corrects a previous return.
• Filing an appeal or claim in connection with the tax.

Topics of interest to tax authorities

Every year, the Spanish tax authorities publish general guidelines on the annual fiscal and customs control plan. These guidelines identify priority areas for verification, inspection and control during the corresponding fiscal year.