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Tax withheld (retenciones) and account deposits (ingresos a cuenta)

What they are, when you should apply them and your obligations as a withholder

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Advance payment of deductions for a principal residence

If you are an employed worker, you can apply for a reduction in the withholding tax rate applicable to your earned income by two percentage points provided that:

  • the total amount of your total income from all your payers is less than €33,007.20 per year;

  • you make payments on loans for the purchase or renovation of your principal residence (no extension or construction is covered);

  • you are entitled to the deduction for investment in your principal residence;

  • you communicate this situation to your payer (you can use Form 145);

  • and, the withholding tax rate does not become negative as a result of the reduction.

If you are the payer of earned income, you will have to take this into account when calculating the withholding tax to be paid to your employees.

Deadlines for filing and effects

You can notify as soon as you allocate amounts to the purchase or renovation of your main residence.

The regularisation of the deduction rate will take effect from the date on which you notify it, provided that there are at least 5 days left to draw up the payroll.

You do not have make this notification every year unless there are variations in the data you initially communicated.