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Practical Guide to Income Tax 2025. Part 1.

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 the spouses Mr. "A", resident in Spain and Mrs. "B", resident during 2025 in Germany, with a recognized degree of disability of 40 percent and the son of the above, Mr. "C", under 18 years of age, who lives with Mr. ARM in Spain.

To 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 appropriate, and, if so, the amount to be deducted from the state tax liability and the regional tax liability of the tax return IRPFABBR, fiscal year 2025 by Mr. "A" and his son, Mr. "C", taking into account the following data:

  • In the statement of IRPFABBR Mr. "A"'s full state tax liability amounts to 15,250 euros and his full regional tax liability to 16,000 euros, having the right to general tax deductions amounting to 1,550 euros.

  • In the statement of IRPFABBR For Mr. "C" in 2025, the sum of his total state and regional contributions amounts to 300 euros, and he is not entitled to any deduction.

  • The non-resident family unit member, Ms. "B", paid the amount of 380 euros for the Non-Resident Income Tax quota corresponding to the income obtained in Spanish territory in that year 2025.

  • The total net tax that would have resulted from having been able to choose to pay taxes jointly by all members of the family unit would have been 29,280 euros.

Solution :

Previous note: The numerical data used in this example are simulated and are intended solely to explain how this deduction is calculated and how its amount is distributed when there are several taxpayers. PIT, integrated into the family unit, who have the right to it. It is therefore noted that the amounts of full quotas and net quota do not coincide with those that could result in a real scenario.

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

  • Sum of the following installments:

    - Taxpayer Mr. "A": Sum of full state and regional contributions minus deductions: (31,250 − 1,550) = 29,700

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

    - Non-resident Ms. "B": Non-resident Income Tax Fee: 380

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

  • Amount of the net tax if all were residents and paid taxes jointly (C2): 29.280

  • Difference (C1 -C2): (30,380 − 29,280) = 1,100

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

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

Sum of the full state and regional quotas reduced by the deductions of taxpayers Mr. "A" and Mr. "B": (29,700 + 300) = 30,000

  • 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 to be applied to each resident will be carried out in proportion to the respective total quotas reduced by the deductions.

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

  1. The percentage represented by the quotas is calculated PIT with respect to the amount C1 and this percentage is applied to the amount of the deduction that corresponds to each resident.

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

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

    Part corresponding to Mr. "C": 11 x (1.25 ÷ 100) (*) = 0.14 

    (*) These amounts will reduce the total state quota.

  2. The remainder is divided between two

    Part corresponding to Mr. "A": (1.089 - 13.61) ÷ 2 (**) = 537.70

    Part corresponding to Mr. "C": (11 - 0.14) ÷ 2 (**) = 5.43

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

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

    Mrs":

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

    Amount that reduces the autonomous integral quota = 537.69

    Mr. “C”:

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

    Amount that reduces the autonomous integral quota = 5.43