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Practical manual for Income Tax 2021.

Special cases of income concurrence: Annuities for alimony for children and progressively exempt income

The procedure applicable in the event that there are simultaneously annual alimony payments for children and exempt income with progression incorporates the liquidation specialties of each of said income as discussed in the following example.

Example:

Mr. JRF, resident in the Community of Madrid, obtained a general taxable base of 23,900 euros in the 2021 financial year. He has also obtained exempt income with progressivity amounting to 2,950 euros.

During the year, he has paid annual maintenance payments to his children amounting to 2,800 euros, as provided for in the judicially approved divorce settlement agreement.

Determine the full contributions corresponding to the 2021 financial year, knowing that the amount of the personal and family minimum amounts to 5,550 euros.

Solution:

1. Determination of the bases for the application of the tax scales

Since he paid annuities to his children during the year by court order and the amount was less than the amount of his general taxable base, the general and regional scales of the tax must be applied separately to the amount of the annuities (2,800) and to the amount of the rest of the general taxable base.

This last amount is determined by increasing the general taxable base (23,900 euros) by the amount of exempt income with progression (2,950) and decreasing the result by the amount of the annual alimony paid in the year (2,800). Definitely:

Base "A" = 2,800

Base "B" = (23,900 + 2,950) − 2,800 = 24,050

2. Application of the tax scales to the amount of the annuities, base "A" (2,800 euros)

  • General tax scale 2,800 x 9.50% = 266

    Odds 1 = 266

  • Autonomous scale

    2,800 x 9% = 252

    Odds 2 = 252

3. Application of the tax scales to the rest of the general taxable base, base "B" (24,050 euros)

  • General tax scale

    Up to 20,200 = 2,112.75

    Other: 3,850 at 15% = 577.50

    Odds 3 = 2,690.25

  • Autonomous scale

    Until: 17,707.20 = 1,709.31

    Other: 6,342.80 x 13.30% = 843.59

    Odds 4 = 2,552.90

4. Application of the tax scales to the general taxable base corresponding to the personal and family minimum increased by 1,980 euros

Since the amount of the general taxable base (23,900) is higher than the personal and family minimum increased by 1,980 euros (5,550 + 1,980 = 7,530), it forms part of the general taxable base in its entirety.

  • Overall scale

    7,530 at 9.50% = 715.35

    Odds 5 = 715.35

  • Autonomous scale

    7,530 at 9% = 677.70

    Odds 6 = 677.70

5. Calculation of the quotas for the purpose of determining the average tax rates

To determine the average tax rates, both state and regional, it is necessary to first calculate the respective state and regional rates. These fees are calculated as follows:

  • State fee = (fee 1 + fee 3 - fee 5):

    266 + 2,690.25 – 715.35 = 2,240.90

  • Regional quota = (quota 2 + quota 4 - quota 6):

    252 + 2,552.90 – 677.70 = 2,127.20

6. Determination of average tax rates

  1. Average state tax rate TME: 2,240.90 ÷ 26,850 x 100 = 8.34%

  2. Average regional tax rate = AMR = 2,127.20 ÷ 26,850 x 100 = 7.92%

7. Determination of the general state and regional integral quota

  • General state total rate (general taxable base x TME) 23,900 x 8.34% = 1,993.26

  • General regional integral quota: (general taxable base x TMA) 23,900 x 7.92% = 1,892.88