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A guide to options for lowering your personal income tax bill for 2022


The end of the year is coming and time is running out Until taxpayers make moves that allow them to reduce the tax bill they will have to face next year for income generated in 2022.

Regulations already in place and changes expected in the Income Tax Regulation (IRPF) 2023 open space for taxpayers to design a plan that allows them reduce the taxes they have to pay. According to the Register of Tax Advisers (Reaf), there are nearly a hundred possible strategies to reduce the taxes that citizens pay on their personal income, and according to the Association of Treasury Technicians (Gestha), you can save up to €3,425 with these options.

Possibilities range from the most traditional, which includes pressing for tax relief on contributions to pension plans, which can be extended to €8,500 if made for a company pension plan, or Home purchase discount, which those who bought their homes before January 1, 2013 can still benefit from, to the new savings possibilities that have arisen from the home renovations tax credit when it has the effect of lowering your energy bill; of the income generated by renting a home up to 60%; and for tax incentives created to facilitate financial support for new entrepreneurial ventures through so-called “business angels” which, according to Gesta, constitute one of the most powerful mechanisms for tax savings in income tax.

Combined with the tax savings tools already in place in the current legislation, the entry into force of 2023 new measuresin particular the increase in taxes on capital income above 200,000 euros, calls, according to Reaf, to consider the possibility of materializing financial instruments that were expected to be collected in the short term to avoid the increased rates that income from savings would receive from January 1.

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Avoid the 2023 coup

The draft budget for the year 2023 is expected to be Increase the tax burden For income and savings over €200,000, which have hitherto been taxed at 26% and will now be taxed at 27%; and more than €300,000, which will pay 28% personal income tax. For the record of tax advisors, the situation provides some wiggle room for proper tax planning.

Progress to 2022 to materialize the financial investments. “If you plan to take a dividend from your company, or sell or donate any asset that makes a profit, the increase in taxes on savings income planned for 2023 will affect you and it will be in your best interest to carry out these operations before the end of the year December 31,” the agency advises.

Rethink operations forward. One of the classic options for tax savings, the application of transferring assets to the special base of forward operations to avoid falling into yield brackets in which more taxes are paid, may become inadvisable this year if it is deferred to future years with returns exceeding 200,000 euros.

retirement plans

The snip the Sanchez government has made in the past two years for the tax deduction of contributions to its pension plans Mini tax advantage They can be obtained by transferring part of the savings to income after retirement, but they have not completely eliminated its importance as a tax incentive that, according to Gesta, can save 705 euros on the income statement.

Discount up to 1,500 euros. Until two years ago, a taxpayer could reduce his tax base by up to €8,500 for his contributions to pension plans, but on the next income statement he will only be able to do so by €1,500. However, the tax advantage that can be obtained varies between 285 and 705 euros depending on the type paid in rent. The higher the rate, the greater the savings.

Negotiate a hiring plan. From 2023, the law will allow pension plans to be further reduced for employment plan beneficiaries, so, according to Reeve, the time is right to promote this savings tool in companies to ensure a tax advantage in the future.

housing pressure

The abolition of the housing tax credit, which for many years was the main tool for tax savings for Spanish taxpayers, did not eliminate the possibility of using the house.

Discount for purchase. Those who bought a home before January 1, 2013 and have already benefited from this discount can still apply it and save 15% of the payments on the mortgage with an annual limit of €9,040. Treasury technicians recommend evaluating the possibility of making an early mortgage payment to improve your tax bill.

For those who put up their homes for rent. Targeting the rental home for the traditional rental market and not for vacation or occasional rentals has a bonus, as it allows for up to 60% reduction in income earned at the time the income statement is made.

Reinvest the income obtained from the sale of real estate. Another classic. If you sold your home and received a capital gain in the transaction, you can avoid having to pay taxes on that income if the proceeds are reinvested into a habitual residence within two years of the sale.

Energy efficiency

The commitments that Spain has obtained with Europe in terms of reducing energy consumption open up another interesting aspect that taxpayers can take advantage of to reduce their tax bill by 2022.

Take advantage of the extension. The government has extended for another year (until December 31, 2023) the deduction for businesses that improve energy efficiency in the home, allowing 20% ​​of payments made in businesses that reduce energy efficiency by at least 7%. Discount – demand for heating up to a maximum of 5,000 euros.

Savings of up to 15,000 euros. Structural reforms that make it possible to reduce the consumption of non-renewable primary energy by 30% enjoy a discount of 40% up to a maximum of €7,500. If these contribute to the building obtaining energy class A or B, the tax exemption increases by up to 60% of the investment and savings up to €15,000. Reaf states that if a subsidy is obtained, it must be deducted from the investment subject to the deductible.

Residence tax

After the government announced a tax on large wealth, there was talk again of changes in residence.

Certification of change of residence. A taxpayer who changes his country of residence must prove that he has resided there for more than 183 days a year. The idea, according to Reaf, is to present a residence certificate, but if that is not possible, documents proving the date of departure from Spanish territory or the date of commencement of work abroad will have to be presented.

other strategies

Expenses that are difficult to justify for the self-employed. If you are self-employed, remember that you can deduct 5% of the income from your economic activity for this type of expense up to a maximum of €2,000.

‘Business Angels’. If you have contributed capital to a newly established business, you can deduct up to 30% of the amount invested.

Donate to NGOs, trade unions and parties. Taxpayers can deduct 80% of the first €150 donated and 35% of the remaining amounts.

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