Once again into the breach…Income Tax return time is upon us again and while it doesn’t seem like we have put away the Christmas decorations here we are facing the annual tax
evasion avoidance manoeuvres once again.
While many foreign residents in Spain are not working they are still required to make an annual income tax return if they fulfil some fairly basic criteria – one being owning a property. However, those earning less than €22,000 per annum from one single employer or from more than one employer where the sums received from the second and other employers is less than €1500 are excluded.
It is always a worthwhile exercise to cover the legal ways that income tax in Spain can be reduced by virtue of exemptions and deductions and we summarise the main methods below. The principle changes to income tax allowances in 2011 will be looked at in a different post.
Pensions and Life Assurance Plans
Income Tax rules enacted in 2006 allowed anyone below the age of 50 to deduct from tax any contributions towards pension plans up to the value of €10,000 or €12,500 for those over the age of 50.