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Practical manual for Income Tax 2023.

Case b) Collection of unemployment benefit from December 2022 and maternity subsidy from January 21 to February 3

Ms. MDO, who had been receiving unemployment benefits since 1 December 2022, applied for maternity benefit before giving birth to her twins, the amount of which she received from 24 January to 15 May (once the 16 weeks of the benefit had ended), after which she resumed receiving the pending unemployment benefit. Please note that the taxpayer worked for a multinational from 2020 until 30 November 2022.

Solution:

1. Maternity deduction amount

Deduction corresponding to each of the twins:

  • Number of months of compliance with requirements: 12 months

  • Deduction amount: (12 months x 100 euros) = 1,200

  • Deduction limit per child (1,200 euros).

  • Total amount of the deduction for twins = 1,200 x 2 children = 2,400 euros

Note:  As of January 1, 2023, women who are entitled to apply the minimum for descendants when, at the time of the child's birth, they receive contributory or assistance benefits from the unemployment protection system may apply the maternity deduction for each child until the minor reaches three years of age.

In this case, the taxpayer at the time of birth was entitled to unemployment benefit, notwithstanding the fact that her payment had been suspended because it was replaced by a benefit for the birth and care of a child (maternity benefit). While this situation lasts (receiving the benefit for birth and care of a child), no days of unemployment benefit are consumed; The collection of the same is suspended and resumed once it has ended for the time remaining before its suspension.

Therefore, the number of months of entitlement for each child is 12 (January to December) because at the time of birth (January) the mother was receiving unemployment benefit, so she met the requirements, and will be entitled to the deduction until the children reach the age of 3 years.

Deduction for the eldest son:

  • Number of months of compliance with requirements: 8 months

  • Deduction amount (8 months x 100 euros) = 800

  • Limit on deduction per child (1,200 euros)

Note: Mrs. MDO will be entitled to the maternity deduction in 2023 from the month of January inclusive because at the time of the birth of her eldest son (financial year 2020) she was working as an employee, registered with Social Security and making contributions, so she generated the right to the maternity deduction, and she maintains it until the child turns 3 years old (therefore, until August inclusive). The same would happen if you had been registered with RETA at the time of the birth of your eldest child.

Total amount of maternity deduction 2023: (2,400 + 800) = 3,200

2. Additional increase for custody expenses

Additional increase for the eldest child:

  • Number of months of compliance with requirements: 6 months

  • Amount of the increase (1,000 euros ÷ 12 months x 6 months) = 500

    Note: In this case, the additional increase for the costs of custody of a child under three years of age in authorized nurseries or early childhood education centers can reach up to 1,000 euros per year and will be calculated proportionally to the number of months in which the requirements set forth in article 81.1 and 2 of the Tax Law are met simultaneously. The months to be taken into consideration are exclusively those in which the expenses paid are made for a full month. Therefore, since you are entitled to the maternity deduction from January, and the increase for nursery expenses can only be extended until the month prior to the start of the second cycle of early childhood education (September), taking into account full months, only 6 full months are taken into account (from January to June), so the calculation will be 1000 euros ÷ 12 months x 6 months) = 500 euros.

  • Increase limit: 500 euros.

  • The increase of 500 euros does not exceed the limit of the total amount of the actual non-subsidized expenditure of the custody costs: 2,290 euros.

    Note: in accordance with article 81 of the Personal Income Tax Law and article 60 of the Personal Income Tax Regulations , the total non-subsidized expense corresponding to the total annual amounts (for full or incomplete months) paid to authorized daycare centers or early childhood education centers for the pre-registration and enrollment of said minors, attendance, in general and extended hours, and food, will be reduced by the amounts of said expenses that have been paid by the employers of the beneficiaries that are considered exempt income in kind by application of the provisions of letters b) or d) of section 3 of article 42 of the Personal Income Tax Law .

    Therefore, in the present case the custody costs will be: 300 (registration) + 3,000 (6 full months) + 250 (part of July) – 700 (subsidized amount) – 560 (80 x 7 months, corresponding to exempt remuneration in kind) = 2,290 euros.

Note:even if it has been paid by both parents at 50%, both the amount paid by the mother or the taxpayer entitled to the aforementioned increase, as well as the amount paid by the other parent will be considered.

3. Tax return result

Differential rate : 1,500

Deduction for maternity

  • Deduction amount (2,400 + 800) = 3,200

  • Increase for daycare expenses (500) = 500

Result of the declaration (1,500 – 3,200 − 500): −2,200