December is coming. The month in which balances, reflections are made and the year is seen with a certain perspective. But it is also a stage in which you think about the plans for the following year. And in which one must not lose sight of the fact that in a few months it will be time to render accounts with the Treasury, and that then it will be too late to try to reduce the tax bill. The time to pay less taxes is running out.
In these weeks, experts recommend reviewing the movements that our assets have suffered to find out the taxes that we would have to pay next year. There are some tricks to lower the amount for which you are taxed. Without forgetting the fiscal novelties that are being introduced. This year, for example, individual while the number of these same vehicles promoted by companies has risen. The new tranche in the savings base has also increased (up to 26% from 200,000 euros) and for the general income tax base that affects the highest incomes.
Technicians from the Ministry of Finance (Gestha) calculate that in the next income statement taking advantage of certain tax advantages. As is logical, it will depend on salary and assets. “People with incomes of more than 600,000 euros a year will be able to lower their tax bill up to 72,733 euros” and in those with annual returns of less than 21,000 euros, the savings would be around 1,390 euros, they explain.
One of the most classic ways to pay less taxes, playing with the part of savings and investment, is to offset losses and gains, following the requirements allowed by the Tax Agency. On the other hand, pension plans have their own characteristics, both in terms of the money that is contributed to them and the money that is redeemed, and there are other advantages for those over 65 years of age.
Offset profit and loss
Losses don’t have to be bad if you look at it from a tax point of view. You just have to follow certain rules. In Spain there are two blocks in the part of savings. Both are taxed at a scale that goes from 19% for the first 6,000 euros to 26% for amounts that exceed 200,000 euros (see graph), but it is convenient to differentiate before seeing possible ways to compensate.
One of these blocks is that of income from movable capital, which includes interest on current accounts and deposits, dividends, bond coupons or products such as insurance, PIAS or savings plans 5. The other is that of earnings or capital losses, which include what is obtained from the sale of shares, funds, ETFs, sicavs, derivatives, currencies… but also real estate. The rule of thumb is that all the items in each savings drawer are balanced without limits, but without mixing the drawers. What is lost when selling a mutual fund can offset what is gained when selling shares, for example. And if in any of these blocks the final result is negative, there is the option to compensate with the other, always with a limitation of 25%. At a time when cryptocurrencies are booming, just a note: although they are not considered an investment asset, what is obtained when buying and selling them is treated as a capital gain or loss. It would be in the second drawer.
There will be cases in which it is even convenient to sell an asset assuming losses if you have very large profits, but, first of all, “collect the statements for the years 2017, 2018, 2021 and 2020, and the notes you used to prepare them, to to see if it has negative balances in those years that it can compensate in this declaration”, indicate the fiscalists of the General Council of Economists (REAF-REGAF). The Tax Agency allows you to take advantage of the losses of the last four years, something important taking into account the strong losses in the markets in 2020. In the same way, if this 2021 ends with a negative balance, this could be used until 2025. Simply, beware of a rule: a loss cannot be used if homogeneous titles have been acquired in the two months before or after that sale.
Pension plans
All investment products and assets are taxed in the savings part of the personal income tax, with some exceptions such as pension plans or insured pension plans (PPAs), which go directly to the general part of the tax, so the scale is the usual one that goes from 19% to 47%. The other particularity of the plans is that there is a tax advantage: the amount invested can be deducted.
The novelty this year is that the maximum contribution allowed drops from 8,000 to 2,000 euros (or 30% of net income from work and economic activities, the lesser of the two). Another 8,000 euros more could be added to the deduction for contributions to employment plans. “If our spouse obtains net income from work and / or economic activities of less than 8,000 euros a year, we can contribute to his plan up to a maximum of 1,000 euros a year, which we will also be able to deduct,” they point out in Abante .
When withdrawing money from this product, “it is important to know that when we retire we are not obliged to rescue the pension plan immediately, and the reality is that if we do it when we are already collecting the public pension we will surely pay less taxes because, in general, our tax base is usually lower”, they explain from Abante. In addition, for those who redeem it in the form of capital, and not as a periodic income, in those contributions made before 2007 a reduction coefficient of 40% can be applied. There are limitations and “2021 is the last year for those who have retired in 2013 and 2019”, they recall in Abante.
Over 65 years
There is an additional advantage in issues related to saving and investing for people over 65 that is still valid. If these taxpayers sell their habitual residence, “the capital gain they obtain will be exempt”, they indicate from the REAF-REGAF. Nor will they have to pay taxes on the capital gains they have when selling any asset, up to a maximum limit of 240,000 euros, provided that an insured life annuity is built with the total amount within a maximum period of six months.
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