# Example: Deduction applicable to family units formed by tax residents in Member States of the European Union or the European Economic Area

Family unit made up of spouses Mr. "A", resident in Spain and Mrs. "B", resident in Germany during 2020, with a recognized degree of disability of 40% and the son of the above, Mr. "C", under 18 years, who lives with Don ARM in Spain.

Determine whether or not the deduction applicable to family units formed by tax residents in Member States of the European Union or the European Economic Area is applicable, and, if so, the amount that corresponds to deduct in the full state quota and in the full quota of the Personal Income Tax declaration , fiscal year 2020 by Mr. "A" and his son, Mr. "C", taking into account the following data:

• In Mr. "A's" 2020 personal income tax return his full state fee amounts to 15,250 euros and his full regional fee amounts to 16,000 euros, with the right to general deductions from the fee in the amount of 1,550. euros
• In the personal income tax return of Mr. "C" for 2020, the sum of his full contributions, state and regional, amounts to 300 euros, and he does not have the right to any deduction.
• The member of the non-resident family unit, Ms. "B", received the amount of 380 euros for the non-resident Income Tax fee corresponding to the income obtained in Spanish territory in that fiscal year 2020.
• The total liquid tax that would have resulted if all members of the family unit had been able to choose to pay taxes jointly would be 29,280 euros.

### Solution:

Previous note: The numerical data used in this example are simulated and have the sole purpose of explaining the way in which this deduction is calculated and how its amount is distributed when there are several taxpayers of Personal Income Tax , integrated into the family unit, who have the right to it. Therefore, it is noted that the amounts of full quotas and net quota do not coincide with those that could result in a real case.

1. Calculation of the deduction applicable to family units formed by tax residents in the EU / EEA

• Sum of the following fees:

- Taxpayer Mr. "A": Sum of full state and regional contributions reduced by deductions: (31,250 − 1,550) = 29,700.00

- Taxpayer Mr. "C" Sum of full state and regional contributions reduced by deductions (300 − 0) = 300.00

- Non-resident Mrs. "B":

Non-Resident Income Tax Fee: 380.00

Total amount (C1): (29,700 + 300 + 380) = 30,380.00

• Amount of the net tax if all were residents and were taxed jointly (C2): 29,280.00
• Difference (C1 -C2): (30,380 − 29,280) = 1,100.00

Note: Since the difference is positive (1,100), the deduction for this amount must be applied. If said difference had been negative, the amount to be computed would be zero.

2. Calculation of the total amount of the deduction that corresponds to each resident, taxpayer of IRNR :

Sum of full state and regional contributions reduced by the deductions of taxpayers Mr. "A" and Mr. "B": (29,700 + 300) = 30,000.00

• Amount corresponding to taxpayer Mr. "A": (29,700 x 1,100 ÷ 30,000) = 1,089.00

• Amount corresponding to taxpayer Mr. "C": (300 x 1,100 ÷ 30,000) = 11.00

Note: The calculation of the amount of the deduction that must be applied to each resident will be carried out in proportion to the respective full quotas reduced by the deductions.

3. Amount of the deduction that will be deducted from the full state fee and the full regional fee

1. The percentage that the Personal Income Tax contributions represent with respect to the C1 amount is calculated and this percentage is applied to the amount of the deduction that corresponds to each resident .

Percentage quota IRNR with respect to C1: (380 ÷ 30,380) x 100 = 1.25%

Part that corresponds to Mr. "A": 1,089 x (1.25 ÷ 100) (*) = 13.61

Part that corresponds to gift "C": 11 x (1.25 ÷ 100) (*) = 0.14

(*) These amounts will reduce the full state fee

2. The rest is divided between two

Part that corresponds to Mr. "A": (1,089 - 13.61) ÷ 2 (**) = 537.70

Part that corresponds to gift "C": (11 - 0.14) ÷ 2 (**) = 5.43

(**) These amounts will reduce the full state fee and the full regional fee.

3. Amount of the deduction that will reduce the full state and regional contributions

Mrs":

Amount that reduces the full state quota (13.61 + 537.70) = 551.31

Amount that reduces the full regional quota =537.69

Don “C”:

Amount that reduces the full state quota (0.14 + 5.43) = 5.57

Amount that reduces the full regional quota = 5.43