Example: contributions to social security systems
Don SMG single, in 2020 he contributed the amount of 3,000 euros to the pension plan of the employment system whose promoter is the company in which he works. For its part, in that year the company made a business contribution of 2,600 euros to the aforementioned pension plan and 2,000 euros to a collective dependency insurance contract that it contracted to implement the commitments assumed with its staff in the agreement.
By not being able to reduce the tax base for all contributions and Don SMG contributions requested, in its individual tax return Personal Income Tax for the 2020 financial year, to reduce in the following five years the outstanding excess that amounted to 3,500 euros for contributions and contributions to the pension plan, and 1,500 euros for the business contribution to collective dependency insurance.
With regard to fiscal year 2021, the taxpayer has made contributions to the pension plan in the amount of 2,000 euros and the company has made contributions to the aforementioned plan in the amount of 3,500 euros and 2,000 euros to the collective dependency insurance contract that it contracted to implement. the commitments assumed with its personnel in the agreement.
Determine the reduction applicable for contributions to pension plans in fiscal year 2021, knowing that the taxpayer's net income from work amounts to 30,500 euros and coincides with their general tax base, which is also 30,500 euros.
GENERAL TAX BASE = 30,500
REDUCTIONS FOR CONTRIBUTIONS AND CONTRIBUTIONS TO THE PENSION PLAN
The steps to follow are those:
Determination of the amounts pending reduction from 2020 corresponding to contributions and contributions to pension plans
As among the amounts pending reduction corresponding to 2020 there are contributions made by the taxpayer and contributions imputed by the promoter, it must be determined, first of all, which amount corresponds to business contributions and which to the direct contributions of the taxpayer.
For these purposes, in accordance with the nineteenth transitional provision of the Personal Income Tax Regulation , it will be understood that the amounts pending reduction correspond to contributions imputed by the promoter, with the limit of the contributions imputed in said tax periods. The excess over said limit will be understood to correspond to contributions from the taxpayer.
Excess for fiscal year 2020 corresponding to business contributions = 2,600
Excess for fiscal year 2020 corresponding to direct contributions (3,500 – 2,600) = 900
Total (2,600 + 900) = 3,500
Joint maximum limits for reductions
As a joint maximum limit for reductions (both for the excesses corresponding to fiscal year 2020 and for contributions and contributions to pension plans made in fiscal year 2021) the lower of applies to the following amounts :
Percentage limit: 30% s/30,500 euros of net work income = 9,150 euros
Contribution and contribution limits
2,000 euros for all contributions and contributions, without prejudice to the fact that the amount of the latter may be increased by an additional 8,000 euros
Taking these limits into account, the reductions will be applied first to the 2020 excesses and subsequently to the 2021 amounts (see steps 3 and 4).
Own additional limit of 5,000 euros for collective dependency insurance premiums: In this case, 2,000 euros from fiscal year 2021 + 1,500 from the previous fiscal year 2020 = 3,500 euros, which is within the additional limit of 5,000 euros.
The amount of the general tax base of the taxpayer (30,500 euros)
Keep in mind that the tax base cannot be negative as a result of the reductions, so the amount of the general tax base must also be taken into account as a limit for the reduction.
Therefore , in this case the joint maximum limit of the reduction will be the percentage limit of 30 percent on work income that amounts to at 9,150 euros.
Reduction of excesses corresponding to the previous fiscal year 2020: 5,000 euros
The amount pending reduction from 2020, which amounts to 5,000 euros (3,500 euros for contributions and contributions and 1,500 for contributions to collective long-term care insurance) does not exceed the joint maximum reduction limit applicable in 2021 (which is 9,150 euros) and It is applied first on the tax base and for its total amount.
Once the excess for fiscal year 2020 has been applied, the remainder of the general tax base must be determined, in order to make the corresponding reduction for the contributions and contributions to pension plans corresponding to fiscal year 2021. Therefore:
Reduction for contributions and contributions corresponding to fiscal year 2021: 4,150 euros
Having first reduced the outstanding excesses for the 2020 financial year, the amount with the right to reduce the tax base for all contributions and contributions corresponding to the 2021 financial year cannot exceed 4,150 euros (9,150 joint maximum limit – 5,000 excesses for the previous year).
To the extent that this last amount (4,150 euros) is less than the sum of the contributions and contributions made in 2021 to the pension plan and the collective dependency insurance that may be subject to reduction (1,100 for contributions + 3,500 for contributions + 2,000 for collective dependency insurance = 6,600), the amount must be distributed proportionally to the amounts respectively contributed:
- For contributions to the pension plan (4,150 x 1,100) ÷ 6,600 = 691.66
- For business contributions (4,150 x 3,500) ÷ 6,600 = 2,200.75
- For contributions to collective long-term care insurance (4,150 x 2,000) ÷ 6,600 = 1,257.57
GENERAL LIQUIDABLE BASE (30,500 – 9,150) = 21,350
EXCESSES FOR THE YEAR 2021 TO REDUCE IN THE FOLLOWING 5 YEARS
The amounts contributed that could not be reduced in the tax base by application of the percentage limit of 30% applied in this case may be reduced in the following five years.
In this case, the excesses to be reduced in the following exercises will be:
- For contributions to the pension plan 2,000 - 691.66 = 1,308.34
- For business contributions 3,500 - 2,200.75 = 1,299.25
- For contributions to collective dependency insurance: 2,000 - 1,257.57 = 742.43
The amount of these excesses may be reduced in the following five years, by completing the corresponding subsections of Annexes C.2 and C.3 of the declaration.