One of the main services of Afina Business Consulting is to review income tax returns. The goal of our company is to provide an excellent service. That is why we are pleased to inform our clients and share with them relevant knowledge regarding the service they have come to look for. If you are reading this article, it’s obvious that you want to learn about everything related to the tax accounting. We will explain step by step, everything you need to know and we’ll guide you from the beginning so that you do not pay more.
Income Tax: What is It?
To explain properly how Afina Business Consulting works with respect to tax processes, the first thing you need to know is the definition of income taxes. Reviewing income tax returns is not an easy task. This annual procedure tends to become a really headache for almost all citizens. That’s why most people and entities look for the advice of experts in this area.
Income tax is a government-imposed levy,to the incomes generated by companies and individuals within its jurisdiction. The law usually establishes that citizens (tax payers) must file an annual income tax return, to determine the amount of their tax obligations. Most countries use a progressive income tax system. People with higher incomes,usually pay a higher tax rate, compared to lower-income taxpayers.
Income Tax in Spain
In case you didn´t know, the Spanish income tax is regulated by Law 35/2006, (income tax LIRPF) and Regulation RDR439/2000 (Income tax Regulation RIRPF). As you can see, is a double taxation system when applied to two types of incomes and each of them has its own tax rate.
Why is help important for reviewing income tax returns?
In Spain, about 43% of the annual incomes are employed for the payment of taxes (including the payments to the Social Security, IRPF and an estimate of the VAT). Although it may seem a high figure, it should be noted that it is slightly lower than the EU average (45%), According to the studies carried out by the Institut Économique Molinari and the consultancy EY.
Many taxpayers exceed in their payments, and others make serious omissions in their income taxes returns. Both situations entail to inconvenient from a fiscal point of view. That’s why the demand for experts able to review income statements increases every day.
The general tax includes the following types of taxes
- Income from professional and business activities.
- Temporary and permanent pensions.
- Labor income.
- Property rental (Real estate)
It is important to understand that the tax base of Capital Incomes, also includes the following operations:
- Profit from the sale or transfer of assets (financial assets and real estate)
- Interest rates
In addition, the Autonomous Communities have assumed certain fiscal responsibilities in terms of family or personal allowances, and also on deductions. All This has been carried out taking into account the existence of two tax rates: the national tax rate and that of the autonomous communities.
Important aspects to take into account in income tax returns.
As a consulting company with extensive experience in this field,there are several essential aspects that we always take into account when reviewing income statements.
- Personal information
We must reflect every change that occurred in the family (e.g. children or marital status, moving), since some changes, such as births, can lead to important deductions in the family scope.
- Autonomous deductions
It is important that you know, that these deductions vary depending on the county and/or municipality, and in some occasions they are respectable sums. For this reason, many mistakes are usually made when filling the model.
- Hereditary Gains:
Do not forget this important step that many people usually ignore, when they make their income statement. This can cause you severe penalties if the state notices your omission. Always have in order the documents that verify the sales of shares, real estate or official aid, in case you have made any of these transactions or received any benefit.
- Plans and Pensions.
These aspects are deductible and will allow you to save a substantial amount. Make sure that these aspects are the first ones reflected in the income declaration model.
Other aspects to take into account are the Donations and Affiliations, and the owned or rented property.
Tax on natural persons IRPF
This type of tax, taxes the profits that you have obtained in a calendar year for your economic activities. Applies to all residents of a country and is one of the most important taxes in tax matters.
In Spain it is applied to income from work (contracts), independent work, incomes from real estate capital, etc. They are paid annually from the month of April. Most taxpayers maybe for lack of knowledge or time, make many omissions in their income , both for and against the taxation system.
These omissions generate a new fiscal debt (you will have to pay what you still owe) and in case of having taxed in excess (which often happens). You will receive a refund (which may take a long time). To avoid thistype of problems it is best to hire professional services.
We offer to do everything for you with minimum costs and you won´t have to worry about anything.
Income tax returns for autonomous.
First you must know that all self-employed taxpayers who have obtained incomes, stipulated on the tax for natural persons (IRPF), are required to submit an income statement, excepting those who had lower incomes than those established by the laws, or property losses, whose amount is less than what the law establishes for individual or joint taxation.
How should you pay if you are a autonomous Worker?
You can do this by taking proper control of the tax accounting of your business (income and expenses). The benefit obtained during the fiscal year, will be based on the difference between income and deductible expenses. You must save each of the invoices received and make the relevant accounting entries.
If you are one of those who carry out specific activities you could choose to pay by modules. In your case, those that mark the regulations, based on the activity you do to calculate the net return.
What income should a autonomous compute?
- Self-consumption of Goods and services
- Operating income
- Other income
- Transmission of patrimonial elements.
What are the deductible expenses?
Although all the expenses generatedby your activity can be deducted from an accounting point, it doesn´t work the same way from a fiscal point of view. Fines and sanctions of a criminal or administrative nature will not be deductible, nor the losses, donations or expenses for acts contrary to the law.
1.Operating expenses: expenses for the completion of the activity.
- Wages and salaries: own and those of the personnel that must be hired.
- Social Security: that of the self-employed person as well as that of the personnel in his charge.
- Other personnel expenses:Examples of this arethe contributions to pension plans.
- Leases and royalties of the property where the activity takes place.
- Repairs and conservation.
- Services of independent professionals
- Other external services.
- Fiscally deductible taxes.
- Financial expenses (interest and amortization of bank loans)
- Losses due to deterioration.
- Other fiscally deductible expenses: Like the insurance premiums due to illness.
In general terms, the income calculation minus tax-deductible expenses,equals the pending amount of taxation. We can help you with this cumbersome process. We do everything for you and save you time and especially money.
Maternity Benefits for workers women
In the case of working women, maternity benefits are taxed in the income tax. This income that women workers receive from social security during pregnancy is considered a work performance.
The tax on the income of natural persons also regulates the deduction of up to 1200.00 Euros per year; for each child less than three years old or adopted in Spanish territory. Women with rights to this deduction can request the advance payment of the deduction.
In the case of adoptions, the deduction will be made regardless of the minor’s age. During the three years following the date of the judicial or administrative resolution that declares the adoption process legal.
In addition, the good news is that working mothers can receive different government subsidies, as well as aid for dependent children and also aid for children with disabilities. If you are interested in getting these benefits in Afina Business Consulting we will help you get what you need.
The Big changes in the Spanish Tax Law of 2018.
This year it will be more necessary for you than ever, to get advice on everything that has to do with reviewing tax accounting for the Rent Payment for 2019. The 2018 that almost culminates has been full of fiscal news in almost all areas of taxation. New decrees have been approved in response to the reform of the General Tax Law (LGT)
The new decrees (1070/2017, 1071/2017, 1072/2017 and 1073/2017), modify extensively the regulations of developmentof the LGT.This way the competences and powers of the Tax Administration will be increased. This will allow the fight against fraud, corrections in the handling of taxation and greater control.
In addition, the Royal Decrees 1074/2017 and 1075/2017, establish important reforms in the regulations of the main IRPF, VAT, IS and ISD taxes. Moreover, there are more changes that are expected throughout this 2018, as the reform of certain local taxes, for example, “municipal capital gain” and other modifications already announced. These changes will be the instrument to compensate the lack of agreement, in the approval of the State’sgeneral budgets for 2018.
This 2018 is the first year in which an Annual Regulatory Plan has been approved, where is made a forecast of the rules that are going to be approved during this period. This doesn´t exclude the possibility of the approval of other regulations that may be required by different sectors, social, political or economic. As you can see it becomes essential with the new changes and those that are to come, to get advice from people or entities that can review income tax returns and that at the same time with their tips save you time and money. Contact us
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