The 2023 Personal Income Tax filing season starts on April 3.

The Personal Income Tax (IRPF) and Wealth Tax (IP) filing season begins on April 3, and it brings several new developments and extensions to deadlines that are crucial for all taxpayers. In this article, we outline some of the most important ones.

The Spanish Tax Agency (AEAT) has decided to open this tax season right after Easter. The campaign will start 8 days earlier than last year, giving taxpayers more time to prepare and file their returns.

This year’s filing period runs until July 1, 2024, one day longer than usual, to adjust to the calendar, since June 30 falls on a Sunday. Taxpayers will be able to start filing their returns online from the beginning of the campaign.

In addition, there are significant changes to the assistance provided by the Tax Agency:

• April 3 – July 1, 2024: Online filing of the 2023 Personal Income Tax and Wealth Tax returns.

• May 7 – July 1, 2024: Telephone assistance in preparing returns, with appointments available from April 29 to June 28.

• June 3 – July 1, 2024: In-person assistance at the offices, with appointments available from May 29 to June 28.

Filing the Personal Income Tax return online

One of the main new developments for the new tax year comes from the Royal Decree on anti-crisis measures, approved by the Council of Ministers in 2023, under which the tax authorities reserve the possibility of making it mandatory to file the Personal Income Tax return online. However, for this to happen, personalized assistance mechanisms must be put in place for everyone who needs help. This new development will also apply to Wealth Tax in 2024.

In a significant change, all self-employed workers, regardless of their income, must file a Personal Income Tax return. This entails a notable increase in the number of taxpayers required to file.

Changes to the filing obligation

With the arrival of the 2024 Personal Income Tax campaign, the exempt threshold for filing a return increases. Accordingly, those who have received more than €15,000 from two or more payers, where the second and subsequent payers together exceed €1,500, will be required to file an IRPF return.

This change represents an increase in the exempt filing threshold, which previously stood at €14,000 in such cases.

New Rules for Cryptocurrencies

Cryptocurrencies are now firmly on the tax authorities’ radar. Residents in Spain holding crypto-assets abroad valued at more than €50,000 must include them in their return. This covers both holders and beneficiaries of virtual currencies abroad.

Reduction for residential leases

One of the major new developments in the 2024 Personal Income Tax campaign directly affects income from renting out real estate. The new Housing Law changes the structure of the reductions for leases, which are now set as follows:

• General 50% reduction: the general reduction drops from 60% to 50% in 2024.

• 60% reduction: applicable where renovation work has been carried out in the two years before the property is put up for rent.

• 70% reduction: in this case, the reduction may be applied to leases to young people aged between 18 and 35 in stressed housing markets (mercados tensionados).

• 90% reduction for leases in stressed housing markets: it may be applied to contracts with a rent reduction of 5% compared with the previous contract in areas where the housing market is stressed.

Amount of per diem allowances and travel allowances

Although it already came into force in July of last year, the increase to €0.26 per kilometer traveled in the amount that employees may allocate as part of per diem allowances and travel expenses is maintained in the 2024 Personal Income Tax campaign.

Lower reduction of net income under the modules system

The modules system (sistema de módulos) continues to change. Although the limits for being taxed under the objective assessment method (estimación objetiva) have been extended for 2024, the reduction of net income under the modules system is affected and falls to 5%, compared with 10% in 2023, a special percentage that was approved as a measure in response to rising costs.

Exemption for employment income from company shares

Royal Decree 1008/2023 establishes, with effect from December 7, 2023 and for an indefinite period, the exemption for employment income derived from the delivery of shares (acciones or participaciones) to employees of startups (empresas emergentes).

The delivery of shares need not be made on the same terms for all of the company’s employees, but it must be made within the company’s general remuneration policy and contribute to the employees’ participation in the company.

Tax credit for the purchase of an electric car

It has been decided to extend the tax credit for the purchase of an electric vehicle until December 2024. Accordingly, in the 2024 Personal Income Tax campaign it will be possible to deduct 15% of the acquisition value, on a maximum base of €20,000.

Likewise, a 15% tax credit may also be applied for the installation of electric vehicle charging points, on a maximum base of €4,000.

Changes to the withholding rates applicable to certain types of income

Royal Decree 1008/2023 reduces to 7% the IRPF withholding rate on employment income derived from the creation of scientific, artistic, or literary works.

Hard-to-justify expenses for self-employed workers

Finally, it is worth mentioning the possibility for self-employed workers to deduct, as hard-to-justify expenses (gastos de difícil justificación), 7% of their turnover up to a maximum of €2,000, which represents an increase of two percentage points over the previous percentage (5%).

In addition to all the new developments mentioned above, there are some changes relating to the 2023 IRPF that will apply in the 2024 Personal Income Tax campaign, such as the increase in the limit on contributions to pension plans to €8,500 in certain cases, the increase in the reduction for earning employment income, and the maternity tax credit for women with children under 3 years of age.