10 Tips to pay less tax in Spain

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MADRID – With just over a month to go until the end of the 2023 fiscal year, many people are already thinking about their tax returns for next year and how they can save some money.

Although paying taxes is unavoidable, there are ways to reduce the amount. The Spanish consumer organisation OCU offers some useful tips, especially in these times of inflation and economic crisis.

Useful tips from the OCU

The OCU emphasises the last months of the year can be crucial for saving money. Therefore, advice they give can be extremely useful.

1. Take advantage of regional tax deductions

Each autonomous region in Spain offers different tax deductions, such as for kindergarten, education costs, public transport, domestic help, installation of water or energy saving devices or rent.

2. Report changes in the family situation

The tax you owe depends on your family situation, so it is important to inform your employer of changes such as birth, divorce or disability.

3. Choose non-monetary salary benefits

Some companies offer their employees to pay part of their salary in kind, such as health insurance, meal vouchers or transport vouchers.

4. Donate

Donations are deductible, and even more so if you always donate to the same entities. You can deduct up to 80% on the first €150 donated to NGOs, foundations and non-profit organisations, and 35% on the amount that exceeds this threshold.

5. Take advantage of home deductions

You can deduct 15% of the payments for the purchase of the house, if you bought your house before 2013. Up to a maximum of €9,040 is deductable (or €18,080 if you pay jointly with your spouse and separately indicates). You can also deduct the costs for energy efficiency improvements.

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6. Deduction for electric vehicles and charging points

If you bought a new electric car after June 30, 2023 and register it before January 1, 2024, you can deduct 15% of the value in your next tax return. For the installation of charging points for electric vehicles, 15% of the price of the installation may be deducted, after deduction of any subsidies or government support received, up to a maximum of €4,000.

7. Don’t sell your house until after you’re 65

If you are over 65, you do not have to pay tax on the profit from the sale of your house. In case the house is owned by both spouses, they must both be over 65 years old. In other cases, only the profit share that belongs to the spouse who has reached this age is exempt from tax. This exemption also applies if you no longer live in your main residence, but the move must have taken place at least two years before the sale.

8. Tips for landlords

As a landlord, you can deduct expenses such as property taxes, advertising, real estate agent fees, insurance and community fees from your taxable income.

9. Save with retirement plans

Contributing to a pension plan up to €1,500 can reduce your tax bill. However, this is not advisable for people with income from rentals, banking products or capital gains.

10. Compensate for losses and gains

If you made a profit from the sale or donation of goods in 2023 and at the same time had losses on other investments, you can save money by realising these losses and offsetting them with the profits.

With these tips from the OCU, taxpayers in Spain could potentially make significant savings on their tax returns for the coming year.

Also read: After Spanish tax increase, the rich move to Portugal

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