3 April marks the start of the 2023 Personal Income Tax (IRPF 2023) return campaign. The State Tax Administration Agency (AEAT) has various services available to assist taxpayers in complying with this obligation.

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Income tax return

Income tax return What is Personal Income Tax (IRPF)?
Article 31 of the Spanish Constitution requires everyone to contribute to the support of public expenditure by their economic capacity using a fair tax system inspired by the principles of equality and progressiveness which, under no circumstances, shall be confiscatory in scope.

Taxes – taxes, fees and special contributions – are a means of obtaining the resources necessary to support public expenditure. Paying taxes contributes to financing the public services of the state, regional and local administrations.

What is Personal Income Tax (IRPF)?
Personal Income Tax (IRPF) is a tax payable to the State by citizens resident in Spain. It taxes the income obtained during a year, taking into account the personal and family circumstances of each person.

What is income for personal income tax purposes?
The taxpayer’s income is the total income, capital gains and losses and the income allocations established by law, regardless of the place where they were produced and regardless of the residence of the payer.

Specifically, income includes:

Income from work: considerations or profits, in cash or in kind, which derive, directly or indirectly, from personal work or the employment or statutory relationship and are not like income from economic activities, such as wages and salaries, unemployment benefits or pensions).
Income from real estate and movable capital: considerations or profits, in cash or kind, that come, directly or indirectly, from assets, goods or rights owned by the taxpayer and which the taxpayer does not need to obtain business or professional income (as opposed, for example, to the property where the taxpayer carries out his activity).

Income from economic activities (e.g. manufacturing, trade or the provision of services, including crafts, agriculture, forestry, livestock, fishing, construction, mining, and the exercise of liberal, artistic and sporting professions).
Capital gains and losses.
Income allocations are established by law.
There is a personal and family minimum which, as it is intended to cover the vital needs of the taxpayer and his dependants, is not subject to taxation.

Likewise, income that is expressly qualified as such in the IRPF regulations or in another law is exempt. The exemption cannot be invoked outside the cases set out in the law.

Who must pay this tax?
Individuals who have their habitual residence in Spanish territory and those who have their habitual residence abroad in the cases established in articles 8, 9 and 10 of Law 35/2006, of 28 November.

What percentage of the income is paid for Personal Income Tax (IRPF)?
The percentage of the income obtained that is paid to the State depends, first of all, on the type of income. Savings income is taxed at a lower rate than non-savings income, known as general income.

This general income is taxed according to a progressive scale: the percentage of income that is paid for personal income tax increases as income increases. In this way, people with lower incomes are favoured.

The brackets for the 2023 personal income tax return are as follows:

From 0 to 12,450 euros: 19% withholding tax.
From 12,450 to 20,199 euros: 24% withholding.
From 20,200 to 35,199 euros: 30% withholding.
From 35,200 to 59,999 euros: 37% withholding tax.
From 60,000 to 299,999 euros: 45% withholding tax.
More than 300,000 euros: 47% withholding.
Furthermore, the taxpayer is not taxed on all of his income at the highest withholding rate, but the percentages are applied one by one, starting with the lowest. For example, if a person earns 22,000 euros gross per year, he/she does not pay 30% of that total, but 19% for the first 12,450 euros, 24% for the next 7,750 euros (second bracket) and 30% for the remaining 1,800 euros (third bracket).

The 2024 personal income tax brackets, which will affect tax returns to be filed in the 2025 income tax campaign, have not changed for the moment, pending what is established in the General State Budget for this year, which is being prepared by the Government.