Avoid scares in the income statement: do a review before the end of the year | My finances section

There are only a few weeks left until the end of 2020 and time is pressing to put some order in all the chapters of the fiscal year before its closure. If you want to avoid scares in the next income statement, which can be submitted between April and June of next year, it would be better to review some key aspects. Beyond some specific elements derived from the pandemic and that may affect personal income tax taxation, from the Registry of Tax Advisors (REAF) of the General Council of Economists (CGE) they advise taxpayers to find out if their income is exempt and from what exemptions or reductions could benefit your earned income.

Beware of income that is not taxed

Have you been fired? In this case, the compensation received is not taxed up to 180,000 euros. Everything that exceeds this amount is reduced by 30%. However, to benefit from this exemption, the company or another related company cannot hire you again for at least three years from the dismissal. In order for compensation to be exempt, it is also necessary that the inadmissibility of the dismissal be recognized in the act of conciliation before the SMAC or by judicial resolution. “It is important to remember that the Administration must not perceive signs of an agreement between the company and the worker”, they underline from the REAF, although they clarify that, “this last year, the National Court has questioned the signs used to reach the conclusion that there has been a pact, demanding from the Administration a greater evidentiary force”.

Have you not yet agreed on the exempt remuneration in kind? Well, it may be a good time to consider obtaining the transportation check or the restaurant check for next year, among others. In the case of medical insurance paid by the company, for it to be considered compensation in kind that is not taxed, the policyholder must be the company that grants it.

Do you have the supporting documents? The allowances for locomotion, maintenance and stay expenses paid by the companies to their workers are not taxed, but “it is up to the worker to justify the expenses of stay, locomotion in public transport, parking and toll, so it will be better to collect all those supporting documents before of the end of the year”, suggest the tax advisers of the CGE. Likewise, when the company reimburses the partners for the expenses they have incurred to travel to the place where they are going to provide their services, they must prove that the reimbursement only serves to compensate them. Otherwise, it will be understood that it is an income subject to taxation.

Do you plan to transfer the habitual residence and have reached the age of 65? In this case, you will not have to pay taxes on the capital gain, even when you have sold the land where the habitual residence was located, once it has been demolished, provided that the transfer is made within two years after the moment in which it ceased to be your habitual residence. . That yes, “if the ownership of the house is shared with your spouse and if he has not reached that age, it may be convenient for them to wait until he meets it to formalize the transmission and benefit from an exemption of 100% of the capital gain”, advise from the REAF. If the habitual residence consists of a surrounding plot of land and a stable, but with a single cadastral reference, only the capital gain obtained from the sale of the building where the habitual residence of the spouses appears can be declared exempt, that is, the gain that corresponds proportionally to the land occupied by said dwelling.

And the annuity? Those over 65 years of age also have the possibility of transferring any asset or right and not pay taxes on the capital gain that occurs, provided they invest the proceeds, up to a maximum of 240,000 euros, in a life annuity. It is important to remember, however, that the term to make the reinvestment is only six months. Therefore, “in the event that they have not yet reached that age, the taxpayer should assess whether they are interested in postponing the operation until the year in which they have it,” say the CGE’s tax advisors.

Are you considering reinvesting in habitual housing? Any taxpayer can exempt the profit obtained from the transfer of their habitual residence, but, in this case, only if the amount received is reinvested in another habitual residence within a period of two years. In order to apply this exemption, it is not necessary to use all the money collected with the sale, but “it will be sufficient to apply for the same purpose money borrowed from a third party, either directly or as a result of the subrogation in a loan previously contracted by the person who transmits the property”, they explain from the REAF.

Have you donated a business or shares in a company through which you carry out an economic activity? Check that the requirements of the state regulation of the Inheritance and Gift Tax are met to apply the reduction in the transfer of the family business and, if so, you will not pay for the capital gain.

Work performance

Do you have to move the residence? An unemployed person registered in an employment office who accepts a job that requires a change of residence, can deduct an additional 2,000 euros for other expenses in the tax period in which that transfer occurs and in the following one. “However, it must be borne in mind that it will not be applied if no income is obtained from accepting the job for which they had to change residence,” they point out from the REAF.

Will you receive a supplement to the pension in a single payment? If you receive, since your retirement, a monthly supplement to your pension, for several years, and your employer proposes its replacement by a single payment, you can reduce this amount by 30%, up to a limit of 300,000 euros.

Are you considering rescuing the pension plan? The tax advisors of the CGE point out that the benefits are taxed as income from work, and that, if the plan is redeemed in the form of capital, you can enjoy a 40% reduction on the amount corresponding to the contributions made prior to the year 2007 On the other hand, if it is rescued in the form of income, it cannot be applied. “For this reason, before the rescue, you must make calculations and, in addition, avoid accumulating rents to avoid the progressiveness of the rate,” they warn. Likewise, if the retirement or disability occurred in 2012 and he has not received benefits, but wants to benefit from a rescue in the form of capital with the 40% reduction, the taxpayer must remember that the maximum term expires on December 31, 2020. If it occurred in 2018, the same deadline will apply.

Do they give you an incentive to retire? If your company favors the retirement of workers, paying them compensation for the early termination of the employment relationship, and you have the possibility of availing yourself of this measure, keep in mind that you will not be able to reduce these returns, since they do not have a period of generation older than two years. This is so “although the company requires a certain number of years of service to benefit from the program”, clarify the tax advisors of the CGE.


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