At Last! Attractive Tax Reductions for January 2015

The Government has approved the tax reforms which has amended the rules regarding taxpayers with large families (three or more children) or and disabled descendants or ascendants. These taxpayers may apply for deductions in their IRPF (annual tax declarations) and will take effect as from January 2015.

Deductions will be in the region of 1,200 euros per year for each descendant or ascendant with disabilities and for large family, 2,400 euros in the case of large families of a certain category. This would result in a monthly payment of 100 and 200 euros respectively.

Similarly a family member with one child and where only one family member is employed and receives an income of 15.000 with a retention of 15%, will find that this figure will drop to 13.81% in January 2015 and fall further in January of 2016 to 13.23%.

The Government has also introduced deductions for those who are ‘autonomos’ which had been previously announced and will mean a fall in the retention for those with ‘renta de capital’ from 21% to 20% in 2015 and 19% in 2016 and for those on ‘autonomos’ on 15.000 annually from 21% 19% and 18% (15% for those who show earnings at less than 15,000 euros)

The minister for Hacienda Montoro said, that the reform is aimed at providing more income in 2015 and 2016 to the order of 9,000 million euros, and boost job creation through tax cuts on employment. Companies can now calculate the new retention rates. The new fiscal reform will result in tax cuts in general but mainly aimed at the group described above and those on low incomes.

Applications for these reductions can be made from January 7th online via the Agencia Tributaria website using ‘modelo 143’ and from February 3rd 2015 by phone 901 200 345 and by visiting a tax office in your vicinity. The tax authorities may ask for those with large families and disabled dependants to provide the certificates of proof. They will also require a NIE of all applicants including dependents. For children under 14 who do not have their NIF(commencing with the letter K) one can be requested at the tax office. Registration with the department of social security will also be a requisite.

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.