Modifying personal data to recalculate personal income tax

You must provide your personal and family data so that we can calculate the real percentage of personal income tax to be deducted from your gross pay.

You must send this information before the first day of each calendar year or at the beginning of your employment relationship.

If your initial conditions change, you must notify the Personnel Service of the changes. Cases in which changes occur:

a) The number of your descendants changes.

b) The number of forebears dependent on you changes.

c) You, your descendants or your forebears suffer a disability or the degree of disability in any of these cases changes.

d) A legal ruling on alimony or child support is made.

e) Your spouse obtains income of more than €1,500 in the calendar year.

f) You were previously registered as unemployed at an employment office and you accept a job that involves moving to a new town. The reduction for this reason will be applied in the tax period in which your change of residence occurs and in the following one.

g) You become a taxpayer because of a change of residence (this must be understood as a tax residence, that is, more than 183 days in the calendar year).

h) You have earned income in a period of more than two years during previous tax periods subject to a reduction in withholding tax because of irregular earnings, as referred to in Article 18.2 of the Tax Law, but this reduction was not applied in the self-assessment.

Children and other descendants

You may incorporate in your statement for personal income tax any children and other descendants who meet the following requirements:

1. They are single.
2. They are under 25 years old or have a disability.
3. They live with you. Descendants who depend on you but reside in a specialised centre are also understood to live with you.
4. Their annual income, excluding exemptions, does not exceed €8,000.

In the event of adoption, or pre-adoptive or permanent fostering, the reduction may be applied, regardless of the age of the minor, in the tax period in which they are entered in the Civil Registry and in the following two. When registration is not necessary, the reduction may be made in the tax period in which the legal ruling is made and the following two.

When they live with both parents, the descendants are calculated by halves (that is, each spouse enjoys a reduction in equal parts for each child). When the taxpayer has sole care of the descendants (for example in a one-parent family) they are entitled to the whole reduction per child.

Forebears

You may incorporate in your statement for personal income tax any forebears who meet the following requirements:

1. They are over 65 years old or have a disability.
2. They live with you for at least six months a year. Forebears who depend on you but reside in a specialised centre are also understood to live with you.
3. Their annual income, excluding exemptions, does not exceed €8,000.

If the forebear fulfils the above requirements but lives for half the year with other descendants, the total number of descendants, including you, must be entered in the statement.

When two or more taxpayers are entitled to apply this reduction, the amount will be divided equally among them.

Repayment of loans for the purchase or rehabilitation of the habitual dwelling

If you are making payments for loans used to acquire or rehabilitate your habitual dwelling (if it was purchased, or payment of rehabilitation works was made, before 1/1/2013) and earn less than €33,007.20 per year,* you can ask the company to reduce the percentage of withholding tax.

* Please bear in mind the following:

If you receive income simultaneously or successively from two or more paying agencies, the full annual income from all paying agencies will be taken into account.

Form 145 must be submitted, following the instructions in the document: "Instructions for completing Form 145", in this e-services portal form.

Depending on the reason for submitting the form, it must be accompanied by the corresponding supporting documents, as specified in the following section (Supporting documents).

Form 145 must be accompanied by the documents listed below:

• In the case of the birth, adoption or fostering of a child: family record book or resolution on the adoption or fostering.

• What happens if my pay changes as a result of promotion, demotion or any other reason during the tax year?
  The withholding rate will be adjusted.

• Do I need to present the “Model 145” form every year?
  You do not need to present it in each tax year unless your personal and family circumstances change.
  You may send notification of any changes in your personal and family circumstances that occur during the year and entail a change in the rate of withholding tax. The resulting adjustment will have effect from the first recalculation of personal income tax following the notification.

• You must use the “Model 145” form to notify the UPC of any change in your personal circumstances that leads the UPC to apply a different rate of withholding tax.
  Failure to notify the paying agency (UPC) of your personal and family circumstances or of any changes in them will lead the UPC to apply the rate without taking into account these circumstances, without prejudice to any responsibilities that you may have if your failure to notify such changes leads to the application of a lower rate than the corresponding one.
   
• Repayment of loans for the purchase or rehabilitation of the habitual dwelling
  You must send the notification from the moment when you incur expenditure for the purchase or rehabilitation of your habitual residence using external finance. It will have effect in the first recalculation of your personal income tax following the notification.
  In contracts or relationships of less than one year, the interest rate may not be less than 2%. In some cases, this reduction may not apply if the interest rate is less than 2%.
   
• Influence on personal income tax of maternity or paternity leave paid by the social security system
  When you have been on maternity or paternity leave, the pay you receive during this period comes from another paying agency: the social security system. The UPC does not compute this pay in the taxable base for the purpose of applying personal income tax, so the percentage deducted after the leave is much lower.
  In general, you are not obliged to file an income tax declaration if your income does not exceed €12,000 per year.
  In this case, anticipating the result of the declaration, you can request a one hundred percent voluntary withholding (which can be the percentage of the last salary before the leave).
   
• Temporary contracts/appointments
  
  • During the first year of the employment relationship and within the same fiscal year, your personal and family situation and the annual income that you are expected to receive affect the calculation of the rate of personal income tax applied. If this situation changes, it will affect the rate of personal income tax that is applicable to the different periods of recruitment or extension of temporary contracts/appointments.

  • In temporary contracts/appointments, the percentage is calculated in accordance with expected remuneration and the term of the contract in that tax year.

    If there is a previous employment relationship or a change in the relationship during the tax year, you may apply for a voluntary withholding of personal income tax (as long as this is greater than the tax authority demands).

  • Any change in the employment relationship within the same tax year (extensions, changes in salary, leave, etc.) leads to a recalculation of the percentage of income tax withheld. The later in the year that the change occurs the greater the percentage withheld, because the adjustment is made from the month in which the change occurs up to December.

  • If the change occurs at the beginning of the year (for example in February), the impact on the rate will be lower because the amount will be adjusted over eleven months, from February to December.

Example 1

A person with family situation 3, without children and with a gross income of €25,000 per year.

The withholding tax calculated in January for the whole year will be 15% and the annual amount of withholding tax €3,750.

In February, they start to earn €30,000 per year. The new rate to be applied after the change will be 17.14% for the months from February to December, and the annual amount of withholding tax €5,142. As €312.50 was withheld in January, €4,829.50 must be withheld from February to December, or €439.04 per month.

If the change occurs at the end of the year (for example in November), the impact on the rate will be lower because the amount will only be adjusted over two months, from November to December.

Example 2

A person with family situation 3, without children and with a gross income of €25,000 per year.

The withholding tax calculated in January for the whole year will be 15% and the annual amount of withholding tax €3,750.

In November, they start to earn €30,000 per year. The new rate to be applied after the change will be 21.53% for the months from November to December, and the annual amount of withholding tax €6,459. As €3,125 was withheld since January, €3,334 must be withheld from November to December, or €1,667 per month.

• Voluntary withholding tax application form

• Resolution of 3 December 2015 of the Department of Tax Management of the State Agency for Tax Administration, which modifies that of 3 January 2011 approving the “Model 145” form for earned income receivers to notify their paying agency of their data or of changes to their data.
   
• Royal Decree Law 9/2015, of 10 July, on urgent measures to reduce the tax burden of payers of personal income tax and other measures of an economic nature.
   
• Law 26/2014, of 27 November, which modifies Law 35/2006, of 28 November, on personal income tax, the recast text of the Law on income tax of non-residents approved by Legislative Royal Decree 5/2004, and other tax regulations.