Do I Pay Income Tax On Unemployment Benefits?

Yes you do. Unemployment benefits (paro) are seen as income from work and therefore subject to Income Tax and need to be included in your RENTA.

Although SEPE/INEM should withhold a percentage of IRPF retention, in practice they do not always do so, or only a low percentage.

If you don´t want any unpleasant surprises and/or having to pay Income Tax on your RENTA declaration in June of the following year, check your bank details re your paro payments to see whether any IRPF is being withheld. If it´s not, you can change that and ask them to do so.

More info on this

LINK

Info on how to get an IRPF certificate from SEPE, necessary for your RENTA income tax return.

Please beware that if previously you were not obliged to file a tax return because of your income coming from one source and remaining under the threshold, by receiving paro this could change as SEPE/INEM is seen as a second ´income source´.

Info on RENTA income tax thresholds.

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.