Before you can sit down to prepare your tax return you need to gather some necessary figures. Where can you find them?
The annual tax return covers typically the following types of income:
1. Employment related income: Wages, salaries, pensions, other compensations in kind.
2. Income from Real Estate. ( Rentals,.. )
3. Income from Assets other than Real Estate. ( Investments, criptocurrency, etc…)
4. Income from Business Activities. ( self-employment)
5.Accrued income (this is a type of wealth tax).
6.Capital gains. ( gains revealed when an asset is sold. )
In general, for each income we need to determine the taxable amount, for which we need to consider:
1. Gross income
2. Deductible expenses
3. Applicable allowance and deductions
In cases where tax withholdings (in Spain or abroad) have been made at the time of receiving the income, these must be taken into account too in order to reduce the tax bill.
In most cases, this necessary information is available in summaries or certificates provided by the payers.
If the income was earned in Spain and the payer was obliged to withhold tax, the tax authorities will already know about the income and it will appear in the tax information available to us at the time we prepare the tax return. However, this information may not be complete, particularly with regard to deductible expenses.
Income from work or pension
Some documents that can provide this information
Pay slips
Payer’s certificates
* If this income comes from Spain, it will appear in your tax information. You do not need to declare anything.
Business activity
Your accountant surely will have summaries of your business accounts showing gross income, expenses and tax paid.
Property Letting
Provide the following information:
1. Gross income
2. Deductible expenses
3. Register value of the property
4. Type of contact with tenant ( long term or otherwise)
5. Tax withheld
6. Number of days per year the property was rented.
Dividends
Certificate for the payer.
If you have an investment portfolio, your bank should provide the tax information for the year.
Bank interest
Certificate from the bank
Cryptocurrency or shares
Both shares and cryptocurrency are considered assets. The capital gain appears when you sell your asset.
The certificate from your broker should include the following information
1. Purchase price & date
2. Selling price & date
Property Sale
When selling a property capital gain is disclosed.
1. Purchase price & date
2. Selling price & date
3. You can also include as expenses all legal costs related to the purchase or sale.( notary fee, lawyer’s fee, agent commission…These are deductible expenses as long as you have the invoices)
4.If the property was used as part of a business and the depreciation of the property was used to reduce income tax in the past, the depreciated amounts should be included in the calculations to obtain the capital gain.