The approval of the General State Budgets by Congress, on December 3, supposes the introduction of some novelties in personal income tax for 2021 that will have to be taken into account before the start of the new year, if you want to avoid scares in the next income statement. In the same way, from the Registry of Tax Advisors (REAF) of the General Council of Economists (CGE), they indicate the latest reviews that it is advisable to undertake in the little that remains of 2020 in regard to economic activities, profits and losses assets, reductions in the tax base, personal and family minimums, deductions and integration and compensation of income. All of this with the aim of minimizing the impact of the tax.
State’s general budgets
Do your income from work or your income exceed 300,000 euros? Starting next year, the taxation for earned income and income over 300,000 euros will rise two percentage points, as established in the General State Budgets. For this reason, the advice that they direct from the REAF to workers whose income exceeds that limit is “to advance income before the end of the year, for example, by agreeing with your company the delivery of bonuses, productivity or bonuses, among other things.” It is also a good time for entrepreneurs or professionals, whose returns exceed the previous threshold, “advance sales or income to 2020 and postpone expenses to 2021”, they add.
Do you plan to transfer an asset with a capital gain of more than 200,000 euros? “It would be convenient to dispose of it before the end of the year”, they say from the REAF, “because from 2021 the taxation of savings increases from the current 23% to 26%, for bases that exceed that threshold.” The same happens if you are a partner of a company and you are thinking of withdrawing benefits from it, via dividend distribution, return of the issue premium or by a capital reduction. “If the amount exceeds 200,000 euros, it is better to carry out these operations in 2020”, they emphasize.
Do you have a pension plan and contribute more than 2,000 euros? You can take advantage of this year to contribute up to 8,000 euros, the current maximum limit. As of next year, the set of reductions practiced by all persons who pay amounts in favor of the same taxpayer, including those of the taxpayer himself, may not exceed 2,000 euros per year. “It is also advisable to exhaust the 2,500 euro limit of the contribution to the spouse’s plan, if this is possible, because in 2021 the maximum is expected to be reduced to 1,000 euros,” suggest CGE tax advisers.
Do you carry out an economic activity in a part of your habitual residence? If so, you can deduct the costs of supplies such as water, electricity, gas, telephone or internet. A 30% deduction will apply, but only on the part of the expense that proportionally corresponds to the square meters dedicated to the activity.
Are you an entrepreneur or a professional? The living expenses may then be deducted, as long as they occur in catering and hotel establishments and are paid using electronic means of payment. The daily limit is 26.67 euros when you do not spend the night, if the expense occurs in Spain, and 48.08 euros, abroad. If you stay overnight, these thresholds are multiplied by two.
Have you paid customer and supplier service expenses this year? “The maximum deductible is 1% of the net amount of the turnover for the year itself,” stated the tax advisers of the CGE, “so it is advisable not to go over this chapter.”
Beware of these expenses. The acquisition of prescription glasses, clothing and footwear, the expenses of completing a master’s degree or the cost of the transport pass (unless the principle of correlation of income and expenses and the exclusive use in the activity is proven) are not deductible.
Do you have a small company? “If you want to lower your tax bill, you still have time to acquire a new asset, tangible fixed assets or affected real estate investments and apply a deduction of 5% of the investment made with the net returns of the activity of 2019 or 2020 ( or 2.5%, when the reduction had been practiced due to the start of activity) ”, they suggest from the REAF.
Does the module regime apply? In this case, monitor compliance with the limits in 2020 so that you do not have to go to direct estimation in 2021.
Are you planning to carry out a service or a major sale? You can postpone this income for next year. “In this way, it will reduce the taxation of its income from the activity,” they say from the REAF. However, if the set of returns exceeds 300,000 euros, it may be convenient for you to advance income to this year and defer expenses to the following year, because the tax rate will rise two percentage points in 2021 with respect to the current one for income above 300,000 euros, according to the General State Budgets.
Capital gains and losses
Have you won a court case? The consequent recognition of the costs in your favor generates a capital gain. This year, however, as a result of a recent ruling by the Central Economic-Administrative Court, the gain will be determined by the difference between the recognized amount and the expenses incurred as a result of the lawsuit, although the calculation cannot yield a capital loss, because the Deduction of expenses is limited to the amount of costs. “It must be taken into account that previous years not prescribed for tax purposes can be regularized by applying this criterion”, emphasize the tax advisers of the CGE. On the contrary, the award of costs generates a capital loss for the losing party.
Do you own shares in an entity that went public years ago? If you wish to request the cancellation of the registration of your securities, keep in mind that you will not be able to attribute the capital loss until the entity proceeds to its dissolution and liquidation.
Tax base reductions
Do you make contributions to pension plans? A percentage of the amount allocated to this as well as other social security products may be saved up to the lower of the following limits in 2020: 8,000 euros or 30% of the sum of income from work and economic activities. “At the end of the year it is time to think if we are interested in exhausting the limit, knowing that the tax savings is our maximum marginal rate applied to the contribution,” they explain from the REAF.
In 2020, did your spouse obtain less than 8,000 euros from his job or economic activity? You can also reduce your base in 2020 by making contributions to your spouse’s plan, before the end of the year, with a maximum of 2,500 euros.
Does your spouse or relative have a disability? In this case, you can create protected assets in your favor and reduce your tax base with contributions, up to an annual amount of 10,000 euros, with a maximum joint reducible limit of 24,250 euros, if several family members contribute. This reduction is compatible with that of the pension plan.
Do you pay alimony to the ex-spouse and other annuities for alimony? If these are different from those paid to the children, they reduce their tax base, as they constitute income from work for the recipient. Of course, “it is necessary that the regulatory agreement or judicial resolution specify which part is compensatory pension and what amount corresponds to other concepts,” they clarify from the REAF.
Personal and family minimums
Do you support your children, even if you do not live together and do not have guardianship and custody? You will be entitled to apply half of the minimum for descendants, but only if you do not benefit from the special treatment for child support annuities.
What happens with annuities for child support by court decision? When the amount is less than the general taxable base, they are taken to the personal income tax scale separately from the rest of the general taxable base and do not constitute income for the children. The personal and family minimums, in addition, are increased by 1,980 euros. However, this tax treatment will be possible “only if the regulatory agreement has been judicially approved, signed before a court clerk or in a public deed before a notary,” they point out from the REAF.
And the extraordinary payments? Dentist, orthopedics, optics, camps, English classes, extracurricular activities, among others, can be included in the concept of annuities for food in favor of the children, but only if the agreement establishes that these expenses will be assumed in halves by The parents.
Do you live with your parents and one of them earns less than 1,800 euros per year? In this case, the minimum for ascendants for this parent may apply. In addition, your parents may file a joint return.
Donations. Since January 1, the deduction for donations has been increased by five percentage points, so that you still have time to make them before the end of the year and reduce your tax bill. You can deduct 80% of the first 150 euros donated. The rest of the donation entitles you to deduct 35% of its amount, unless you regularly make donations to that same entity, in which case it will be 40%.
Do you have capital that you plan to invest before the end of the year? Note that 30% of the subscriptions for shares or participations in newly or recently created companies can be deducted, on a maximum annual basis of 60,000 euros. Both partners who make monetary contributions and those who contribute credits that they have in front of the company, can apply this deduction.
Are you part of a large family? You are entitled to a deduction of 1,200 euros per year or 2,400 euros if it is a special category. In addition, you can deduct 50 euros per month more for each child who exceeds the number necessary to be a large family (three, the general, or five, the special). “Having a large family title is a requirement that is required for each month,” recall the REAF tax advisers. “If you still do not have it, request it as soon as possible and you can deduct for the last month of the year,” they advise.
Do you have a non-legally separated spouse with a disability? You can deduct 1,200 euros per year for him, provided that the latter does not receive annual income, excluding exempt ones, exceeding 8,000 euros. It is not possible to apply this deduction when the child is entitled to the deduction for an ascendant with a disability, regardless of whether or not he applies the deduction on his return.
Integration and compensation of revenue
Have you obtained any capital gains by transferring assets? “There is still time to lower the cost of the tax invoice by transmitting other items with losses, regardless of the time they have remained in your assets,” recommend the tax advisers of the CGE. These losses are subtracted from the gains from transfers.
Did you have a negative balance due to the transfer of assets in previous years? If it has not been more than four years, you can realize capital gains. In this way, the taxation of the same will be attenuated or canceled by the use of negative balances.
Do you have positive returns that go to the savings part? The typical example is interest and dividends, which can be reduced with the negative balance of the integration of capital gains and losses caused by transfers, up to a maximum of 25%. The remaining negative balance may offset the balance of returns on movable capital in 2021 and beyond.
Do you have negative capital gains? In this case, you can reduce with them the taxation of the balance of capital gains and losses generated by transfers, with a limit of 25% of the same.