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Practical Income Manual 2021.

Liquidation treatment of exempt income progressively in the General Tax Base

The liquidation treatment of progressively exempt income that, depending on its nature, forms part of the general tax base is structured in the following phases:

  1. The amount of progressively exempt income must be added to the general taxable base and the general tax scale and that approved by the corresponding Autonomous Community, in the autonomous part, will be applied to the amount resulting from said sum. As a result, partial quotas 1 and 2 are obtained.

  2. The general tax scale is successively applied to the amount of the personal and family minimum (as long as it does not exceed the general taxable base or, where applicable, the general taxable base increased with progressively exempt income), thus obtaining partial quota 3 and the regional or complementary tax scale, obtaining partial quota 4.

  3. From the four partial quotas obtained in the previous phases, the following magnitudes are calculated:

    • Resulting installment 1 = partial installment 1 - partial installment 3
    • Resulting installment 2 = partial installment 2 - partial installment 4

  4. From the resulting quotas 1 and 2 calculated in the previous phase, the average state and regional tax rate is determined. In both cases, said average rate is the result of multiplying by 100 the quotient resulting from dividing the resulting installments 1 and 2 by the base for the application of the tax scale (sum obtained in phase 1).

  5. Once these average rates are obtained, they will be applied exclusively to the general taxable base, without including progressively exempt income. In this way, the full state and regional quota, respectively, corresponding to the general taxable base will be obtained.

Example

Ms. PCA, resident in the Community of Castilla y León, has obtained a general taxable base of 23,900 euros and a savings taxable base of 2,800 euros in fiscal year 2021.

The amount of your personal and family minimum amounts to 5,550 euros. In addition, he has received an income of 2,900 euros in Germany which, by application of the Convention between the Kingdom of Spain and the Federal Republic of Germany to avoid double taxation and prevent tax evasion with respect to taxes on income and assets and Its protocol, dated February 3, 2011, is progressively declared exempt in Spain.

Determine the amount of the full contributions corresponding to said taxpayer.

Solution:

1. Sum of the general taxable base and the amount of progressively exempt income

23,900 + 2,900 = 26,800

2. Application of the tax scales to the result of the previous sum (26,800)

  1. General tax scale

    Up to 20,200 = 2,112.75

    Other: 6,600 at 15% = 990

    Odds 1 (2,112.75 + 990) = 3,102.75

  2. Autonomous scale

    Up to 20,200 = 2,112.75

    Other: 6,600 at 14% = 924

    Installment 2 (2,112.75 + 924) = 3,036.75

3. Application of tax scales to the amount of the personal and family minimum

General scale

5,550 at 9.50% = 527.25

Installment 3 = 527.25

4. Determination of quota differences:

Resulting share 1 (share 1 - share 3) = 3,102.75 - 527.25: 2,575.50

Resulting share 2 (share 2 - share 4) = 3,036.75 - 527.25: 2,509.50

5. Determination of average tax rates

  1. Average state tax rate (TME): TME = (2,575.50 ÷26,800) x 100 = 9.61%

  2. Average regional tax rate (TMA): AMR = (2,509.50 ÷ 26,800) x 100 = 9.36%

6. Determination of the installments corresponding to the general taxable base (23,900):

State fee: (23,900 x 9.61%) = 2,296.79

Regional quota: (23,900 x 9.36%) = 2,237.04

7. Lien on the liquidated base of savings (2,800)

State lien

2,800 x 9.5% = 266

Autonomous tax

2,800 x 9.5% = 266

8. Determination of full quotas

Full state fee (7,710.40 + 475) = 8,185.40

Full regional quota (7,834.50 + 475) = 8,309.50