Skip to content

Income Tax Return Filing for Individuals

  • by

The objective of this article is to explain, in a simple way, what personal income tax is and to understand how the income tax return works, answering some common questions, such as who should file it, what should be declared, how the tax works or why some people get paid and others payback and what exactly does this mean.

What is the income statement (IRPF)?
The definition of personal income tax is “Personal Income Tax”, as it corresponds to its initials. Together with VAT, it is the main tax in terms of collection for the Tax Agency. Any person who has lived in any country for more than 183 days during that year is considered “resident” in any country for income tax purposes. Income Tax Returning Filing for Individuals If you have not lived at least that number of days during a year, it is considered a “non-resident” for the income tax return, and in that case, you will have to file a different return: the Non-Resident Income Tax (IRNR).

Who has to file the income tax return?
Any natural person, whether of any nationality, is obliged to present an income tax return, provided they have resided in that country during that year (or have the basis of their economic activity in any country), who:

  • Has obtained income that exceeds the minimum established each year.
  • They have some specific income types, such as those that come from economic activity; however, this minimum is not exceeded. The declaration will also have to be presented if they are.

How to make the income statement?
The tax has an annual return, which is what everyone knows as the “income statement.” This declaration must be made every year(model 100) and is presented between April and June of the following year. For example, the declaration of income obtained in 2018 will be presented between April and June 2019. If you want more information, it is advised to read our articles on the tax calendar for freelancers and companies and how to file income tax.

What income must be included in the income statement?
The regulations that regulate personal income tax classify the possible income that a natural person must declare into 5 types of income, depending on their origin:

Income tax benefit for salaried persons: income obtained by each person, resulting from their current or previous work. It includes, in addition to the payroll collected in the year for work, the collection of pensions, unemployment benefits, subsidies, some compensation, scholarships, etc. This is what the law calls “earned income.”

Income Tax for salaried persons: from money held in bank accounts, funds, bank deposits, or other financial investment types. This is what the law calls “returns on movable capital.”

Income tax for self employed: is the income obtained from owning real estate. It may be due to having them leased, but also due to the mere fact of having a part of their property, the Treasury “imputes” them or calculates a supposed income (imputed income).

Income tax return for business people: is the income or benefits obtained from doing an economic or professional activity on their own. They are what everyone understands as the benefits obtained by “working as a self-employed person”, and what the law calls “income from economic activities” for Income tax for freelancers.

Rate this post

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat
Scan the code
Hello 👋
Can we help you?