Income Tax Navarre

Below, we summarize the regulations to be applied with the different financial products for the Annual Income Tax Return for the 2016 fiscal year.

(88 kB) -- More information on Income Tax 2016

The interest paid constitutes capital gains and is included in the tax base of the savings, taxed at the rates on the following scale: 19.5% to 6,000 euros, 21% from 6,000.01 euros to 50,000 euros, and 23.5% from 50,000.01 euros and above.

From January 1, 2015, compensation ceases to exist for deposits opened prior to 01.20.2006, provided for in the corresponding General State Budget Acts, as compensation for the elimination of the old 40% reduction that was applicable to returns generated in terms of more than two years.

Moreover, you can now approve your draft Income Tax Return from our BBVA ATMs, find out how in our blog.

Information on operations with securities

Dividends and interest

The full amount will be included in the tax base of the savings, taxed at the rates on the following scale: 19.5% to 6,000 euros, 21% from 6,000.01 euros to 50,000 euros, and 23.5% from 50,000.01 euros and above. 

Effective January 1, 2015, the tax exemption for the first 1,500 euros of dividends is eliminated. 

Costs deductible from returns: only the administration and deposit costs of marketable securities, without considering costs corresponding to discretionary or individualized portfolio management as such. 

Tax paid abroad: in the case of returns on foreign securities that have been subject to income tax in the country of origin, provided there is no right to a refund of the same in said country, this tax may be deducted from the Personal Income Tax payment with the limit of the result of applying the effective average tax rate to the part of the net tax base taxed abroad.

Returns on Treasury Bills

The return to be included in the tax base of the savings is the amount of the full return, which is the result of deducting the costs associated with the acquisition and disposal from the prior return (obtained from the difference between the transfer value and the acquisition value of the bills).

Return on the Transfer of Financial Assets

The return to be included in the tax base of the savings is the amount of the full return, which will be the result of deducting the costs associated with the acquisition and transfer from the return (difference between the transfer value and the acquisition value of the asset).

To determine the net return, only the administration and deposit costs of marketable securities will be deducted from the full returns, without considering costs corresponding to discretionary or individualized portfolio management as such. 

From January 1, 2015, compensation ceases to exist for financial assets taken out prior to 01.20.2006, provided for in the corresponding General State Budget Acts, as compensation for the elimination of the old 40% reduction that was applicable to returns generated in terms of more than two years.

Transfer of stock

Please note that if you have transferred stock during the fiscal year, for the purposes of Personal Income Tax, capital gains or losses can be generated. For this calculation, the tax regulations establish a number of criteria, which vary depending on whether the stock is listed on the Stock Exchange. We would like to remind you of these criteria in the case of listed stock.

Thus, in the case of the transfer of listed stock, the capital gain or loss will be calculated for the difference between its price on the date of transfer (or the price agreed, when higher) and its acquisition value. To determine the acquisition value, the amount of the pre-emptive rights transferred will be deducted, unless said amount would have been higher than the acquisition value of the stock from which they came, in which case the difference would be under capital gains in the fiscal year in which the pre-emptive rights were sold. 

You should bear in mind that if you are a stockholder in a listed company that has carried out a capital increase, in the event of the sale of your pre-emptive rights, the amount of said sale - provided that it is not higher than the acquisition value of the stock - does not have to be declared in this fiscal year, but rather, it needs to be deducted from the acquisition price of the stock for the purposes of future transfers of said stock. If higher, the excess is a capital gain in the fiscal year in which the sale of the rights occurred. 

Note: Effective January 1, 2017, the amount obtained from the transfer of pre-emptive rights will not reduce the acquisition value of the stock from which they come, but will be taxed as capital gains subject to withholding. 

When there is homogenous stock and not all is transferred, for tax purposes the stock that was acquired in the first place (FIFO system) is considered to be transferred. For stock acquired before 12.31.1994, there is a 25% reduction (14.28% in the case of CII) for each year of age after two years, taking as the age the number of years (rounded off by excess) between the acquisition and December 31, 1996. This reduction will be applied to all capital gains obtained provided that the stock transfer value is lower than its average price in the last quarter of 2005. If the transfer value of the stock is equal to or greater than the average price in the last quarter of 2005, the aforementioned reduction will only apply to the part of the gain between the acquisition cost and said average price. The rest of the gain, that is, the amount between this average price and the transfer value, will not benefit from any reductions. 

However, the reduction described in the previous paragraph is limited from January 1, 2015 to a maximum transfer value of 400,000 euros. They cannot be applied from said figure. 

Therefore, when an element is transferred that would entail the right to apply the reduction because of having been acquired before 12.31.1994, it must be seen whether the transfers made since January 1, 2015 with the right to the aforementioned reduction have exceeded the transfer value of 400,000 euros. If so, they can no longer be applied for the element to be transferred, and if not, they can be fully applied if the sum of the transfer value of the elements transferred since January 1 plus the transfer value of the element to be transferred do not exceed 400,000 euros, and proportionately if it does exceed it. 

Effective January 1, 2015, the capital gains or losses arising from transfers of capital assets are included, regardless of their generation period, in the tax base of the savings in accordance with the following scale: 19.5% to 6,000 euros, 21% from 6,000.01 euros to 50,000 euros, and 23.5% from 50,000.01 euros and above.

Redemption of stock will result in a capital gain or loss for the difference between the value of the disposal of the stock and the acquisition value. Bear in mind that for tax purposes the stock that was acquired in the first place (FIFO system) is considered to be transferred. 

For stock acquired before 12.31.1994, there is a reduction of 14.28% for each year of age after two years, taking as the age the number of years (rounded off by excess) between the acquisition and December 31, 1996. This reduction will be applied to all capital gains obtained provided that the stock transfer value is lower than its net asset value as of 12.31.2005. If the transfer value of the stockholding is equal to or greater than the net asset value at 12.31.2005, the aforementioned reduction will only apply to the portion of the gain between the acquisition cost and said net asset value. The rest of the gain, that is, the amount between this net asset value and the transfer value, will not benefit from any reductions. 

However, the reduction described in the previous paragraph is limited from January 1, 2015 to a maximum transfer value of 400,000 euros. They cannot be applied from said figure. 

Therefore, when an element is transferred that would entail the right to apply the reduction because of having been acquired before 12.31.1994, it must be seen whether the transfers made since January 1, 2015 with the right to the aforementioned reduction have exceeded the transfer value of 400,000 euros. If so, they can no longer be applied for the element to be transferred, and if not, they can be fully applied if the sum of the transfer value of the elements transferred since January 1 plus the transfer value of the element to be transferred do not exceed 400,000 euros, and proportionately if it does exceed it. 

Effective January 1, 2015, the capital gains or losses arising from transfers of capital assets are included, regardless of their generation period, in the tax base of the savings in accordance with the following scale: 19.5% to 6,000 euros, 21% from 6,000.01 euros to 50,000 euros, and 23.5% from 50,000.01 euros and above. 

Subject to a withholding of 20% up to July 11, 2015 and 19.5% from July 12, 2015. (19% in 2016).

In the fiscal year in which the polocyholder receives benefits in the form of capital, capital gains are generated for tax purposes, which will be the result of the difference between the capital received and the amount of the premiums paid (specifically, it is calculated by premium for the difference between the premium paid and the corresponding capital received). 

For premiums paid before 12-31-1994, the returns generated proportionately until 01.20.2006 benefit from the reduction of 14.28% applied for each year of age that exceeds two at 12.31.96. 

However, the reduction described in the previous paragraph is limited from January 1, 2015 to a maximum transfer value of 400,000 euros. They cannot be applied from said figure. 

Therefore, when an element is transferred that would entail the right to apply the reduction because of having been acquired before 12.31.1994, it must be seen whether the transfers made since January 1, 2015 with the right to the aforementioned reduction have exceeded the transfer value of 400,000 euros. If so, they can no longer be applied for the element to be transferred, and if not, they can be fully applied if the sum of the transfer value of the elements transferred since January 1 plus the transfer value of the element to be transferred do not exceed 400,000 euros, and proportionately if it does exceed it. 

The returns obtained will be included in the tax base of the savings, taxed at the rates on the following scale: 19.5% to 6,000 euros, 21% from 6,000.01 euros to 50,000 euros, and 23.5% from 50,000.01 euros and above. 

From January 1, 2015, compensation ceases to exist for premiums contributed prior to 01.20.2006, provided for in the corresponding General State Budget Acts, as compensation for the elimination of the old 40% reduction that was applicable to returns generated in terms of more than two years. 

On the other hand, if the insurance policy is for immediate life annuities, it will be considered as capital gains, to be included in the tax base of the savings, the result of applying the following percentages to each annuity according to the age of the policyholder on the date the policy is taken out:

Age of the policyholder %
Age of the policyholder
Under 40 years of age
%
40%
Age of the policyholder
Between 40 and 49 years old
%
35%
Age of the policyholder
Between 50 and 59 years
%
28%
Age of the policyholder
Between 60 and 65 years
%
24%
Age of the policyholder
Between 66 and 69 years
%
20%
Age of the policyholder
Over 70 years old
%
8%

The information provided facilitate the capital gains resulting from applying the aforementioned percentages to the annuity received. 

Subject to a withholding of 20% up to July 11, 2015 and 19.5% from July 12, 2015. (19% in 2016).

Contributions

They are deductible from the general tax base, with the individual limit per stakeholder being the lesser of the following: 

  • 30% of earned income and income from business activities. 
  • 8,000 euros.

Contributions made to other social security systems are included in the above limits: Employment plans (including the contributions made by the promoter, social security mutual funds, guaranteed benefit plans, company employee pension plans, and private insurance policies that only cover the risk of dependency. 

Contributions that can not be deducted due to the taxable income being too small, or because they exceed the percentage limit (30%), may be transferred to the next five fiscal years, respecting these same limit; this must be applied for on your tax return. 

From January 1, 2015, stockholders may have the amount of their vested benefits corresponding to contributions made at least ten years ago (2025) made available in advance. 

The rights arising from contributions made up to December 31, 2015, with the corresponding returns, will be available from January 1, 2025. 

Please remember that if your spouse does not receive earned income or income from business activities or receives income of less than €8,000, you can deduct the contributions made to your spouse's plan, with a limit of €2,500 per year. 

We would also like to remind you that there are particulars in the case of contributions to pension plans in favor of people with a degree of disability equal to or greater than 65%, both with regard to the contributions made by the person with the disability, and the contributions made by their direct relatives or extended family members up to the third degree, inclusive.

Annuity income payments

The benefits received are considered to be personal earned income for all purposes (withholdings, deductions on earned income), and are included as such in the general tax base. For contingencies from 01.01.2007, when the benefit is received in the form of capital and more than 2 years have elapsed since the first contribution or it is an invalidity benefit, only the part of said benefit corresponding to contributions made up to 12.31.2006 will be included in the general tax base with the previous reduction of 40%*. The part of the benefit corresponding to contributions made from 01.01.2007 will not benefit from any reductions. 

* In relation to the reduction of 40% for contributions made up to 12.31.2006, it is only permitted to be applied in the following manner: 

  • For contingencies occurring from January 1, 2015, the 40% reduction may be applied when the payment of the benefit is requested in the same fiscal year in which the contingency occurs, or in the following two years. 
  • In the case of contingencies that occurred in the fiscal years 2011 to 2014, it will only apply to the benefits received until the end of the eighth fiscal year following that in which the contingency occurred. 
  • In the case of contingencies occurring in or prior to fiscal year 2010, the reduction may only be applied to benefits received up to December 31, 2018. 

If the benefit is received in the form of income, the inclusion in the general tax base will be carried out without any reduction (except in the case of pension plans in favor of people with a degree of disability equal to or greater than 65%, who will benefit from a reduction to their Personal Income Tax up to a maximum amount of three times the IPREM, provided that the benefits are received by the person with the disability). 

Similarly, if the benefit is received in the form of payments without regular frequency, the inclusion in the general tax base will be carried out without any reduction.

Particulars of the Navarre regional tax system

Some of these particulars with regard to Personal Income Tax, with respect to the Common Territory tax system, deserving of a special mention are as follows: 

  • The special tax base of the savings is taxed at the rates on the following scale: 19% to 6,000 euros, 21% from 6,000.01 euros to 18,000 euros, and 23% from 18,000.01 euros and above. 
  • For returns on accounts, deposits and financial assets generated in more than two years, there is no reduction of 40%, while no tax compensation mechanism is provided for under the Regional Law. 
  • In Vivienda savings accounts, taxpayers with total bases for the tax period (calculated in accordance with the provisions of Personal Income Tax regulations) that are less than 20,000 euros (40,000 for Family Units opting for joint taxation) can carry out the deduction for contributions made to Vivienda Accounts, provided that such contributions are used for the first purchase or refurbishment of the property within 10 years of the end of the tax period in which the account was opened. 

Furthermore, it is considered that the requirement as to use of the amounts deposited at the first purchase of the main residence has not been breached in the cases in which the sale contract for the home is terminated for exceptional reasons and the seller or developer has returned to the taxpayer the amounts paid in advance, and the latter has returned said amounts to the old Vivienda Account or a new account in the event that the previous account was cancelled. 

The deductible base for each fiscal year may not exceed 7,000 euros per taxpayer (15,000 for Family Units opting for joint taxation). 

The total amount of the bases corresponding to the aforementioned deductions may not exceed 120,000 euros for all the taxpayer's tax periods (for Family Units that opt for joint taxation, the above limit increases to 240,000 euros).

However, the deduction for contributions made to the Vivienda Account from January 1, 2013 can no longer be carried out for taxpayers with total bases for the tax period (calculated in accordance with the provisions of Personal Income Tax regulations) are equal to or greater than 20,000 euros (40,000 for Family Units opting for joint taxation), but they will not lose the right to deductions carried out before January 1, 2013. Provided that they are used for the purchase or refurbishment of the first main residence within 10 years of opening the account).

  • With loans and credits used to acquire a main residence, the following differences should to be taken into account: 

After the approval of Regional Law 22/2012, of December 26, the deduction for investment in a main residence was substantially amended with effect from January 1, 2013:

  • Access to the deduction is restricted according to the net tax base that the taxpayer obtains in the tax period. In general, the limit will be 20,000 euros (22,000 for members of large families who file individual tax returns) and 40,000 euros for taxpayers who opt for joint taxation (44,000 if they are also large families).
  • The maximum annual deductible base for investment in a main residence is reduced from 9,015 euros to 7,000 euros on individual taxation (from 21,035 to 15,000 euros on joint taxation).

The total amount of the bases corresponding to the deduction may not exceed 120,000 euros (240,000 euros for joint taxation) for all the tax periods.

A transitional system is established under which taxpayers continue to benefit from the right to the aforementioned deduction who before January 1, 2013:

  1. They had purchased or refurbished the main residence.
  2. They had started works to refurbish or extend the main residence. 
  3. They had started construction work on the main residence or they had paid amounts to the developer's account. 
  4. They had started the works and installations to adapt the property. 
  5. They would have purchased the main residence, in the cases of annulment, divorce or legal separation for the purchase of what was, during the marriage, the taxpayer's main residence, and it continues to hold such condition for the children and for the parent in whose care they remain.

Persons in any of these situations with the sum of the tax period's bases equal to or greater than 20,000 euros per year (22,000 for members of large families who file individual tax returns) may continue to enjoy the deduction system in place until December 31, 2012, although the maximum deductible base will be 7,000 euros per year on individual taxation and 15,000 euros on joint taxation.

Deductible base

The amounts invested in the fiscal year in connection with the acquisition or refurbishment of the taxpayer's main residence. Specifically, the amortization of capital and interest and other costs arising from said financing (the latter include the premiums for life insurance policies - the beneficiary must be the credit institution - and fire insurance policies, provided that they are included in the terms and conditions of the loan obtained for the purchase or refurbishment of the main residence). 

All the costs necessary to obtain or purchase the property are also included, including: Notary, Registry, VAT, Capital Transfer Tax and Stamp Duty costs.

Main residence purchased Net tax base less than or greater than:

- Individual tax return: 20,000 - 22,000 (large families

- Joint Return: 40,000 - 44,000 (large families

Right to deduction Maximum base (annual deduction) Maximum base (deduction for all tax periods)
Main residence purchased
After 01/01/2013
Net tax base less than or greater than: - Individual tax return: 20,000 - 22,000 (large families - Joint Return: 40,000 - 44,000 (large families
If it is higher
Right to deduction
NO
Maximum base (annual deduction)
 
Maximum base (deduction for all tax periods)
 
Main residence purchased
If it is lower
Net tax base less than or greater than: - Individual tax return: 20,000 - 22,000 (large families - Joint Return: 40,000 - 44,000 (large families
YES
Right to deduction
€7,000 (individual taxation) and €15,000 (joint taxation)
Maximum base (annual deduction)
€120,000 (individual taxation) and €240,000 (joint taxation)
Main residence purchased
Before 01/01/2013 
Net tax base less than or greater than: - Individual tax return: 20,000 - 22,000 (large families - Joint Return: 40,000 - 44,000 (large families
If it is higher
Right to deduction
YES
Main residence purchased
If it is lower
Net tax base less than or greater than: - Individual tax return: 20,000 - 22,000 (large families - Joint Return: 40,000 - 44,000 (large families
YES

The percentage deduction is 15% in general. However, in the case of family units including two or more children, the percentage is 18%, and 30% in the case of family units that at December 31 meet the requirements to be considered a large family. 

In the case of acquisition of housing classified as of limited free price, official protection or rated price, the deduction percentages indicated above have risen to 20%, 23% and 35%, respectively. 

In loan hedging instruments, even if this had been used to purchase a main residence, the payment received in application of the hedge does not benefit from an exemption. Logically, the amount of the same will not reduce the interest for the purposes of calculating the deduction base for investment in the main residence. 

In dividends and interest on securities, the administration and deposit costs for marketable securities are deductible, with a limit of 3% of the total income from said securities that was not exempt. 

With regard to increases or decreases in assets in the case of redemption of shares in Investment Funds and the transfer of stock, please remember the following differences to be taken into account: Capital increases in which the following two characteristics are simultaneously present are tax exempt: 

  1. The total amount of disposals in the calendar year does not exceed 3,000 euros. 
  2. The capital gain does not exceed 50% of the total amount transferred. If this is not the case, only the excess will be taxed. 

For stock or shares acquired before 12.31.1994, the reductions received on said date will be applied to the capital increase calculated, taking into account the net asset value at 12.31.2006 or the average price in the last quarter of 2006. 

In individual life insurance policies, the following differences should be noted: 

In the case of benefits in the form of capital, for premiums paid before 12-31-1994, the returns generated to said date in application of the 14.28% for each year of age that exceeds two years at 12.31.96, they will apply to the returns generated proportionally to 12.31.2016. 

If the insurance policy is for life annuities, for the application of the percentages on the annuity, it must be deducted from the age of the policyholder in each fiscal year

With regard to contributions to Pension Plans, the following differences should be noted: 

For stockholders aged 50 or under, the maximum deduction limit for the general tax base is the lesser of (i) 30% of the sum of the earned income and income from business activities, and (ii) 6,000 euros per year. In the case of stockholders over 50 years of age, the limits will be 50% and 8,000 euros, respectively. 

The additional reduction to the tax base of up to 2,000 euros per year for contributions made to Pension Plans including your spouse requires that your spouse does not work or that they obtain earned income and/or income from business and professional activities of less than 8,500 euros. 

Lastly, in terms of pension plan benefits, the benefits received in the form of capital continue to enjoy the full 40% reduction, regardless of when the contingency occurred, provided that more than two years elapsed since the first contribution. In addition, in the case of disability benefit, the percentage reduction is 50% (to be applied even if it has not been two years since the first contribution). This percentage increases to 60% in the case of pension plans taken out in favor of people with disabilities, for benefits received in the form of capital by people with a disability, provided that more than two years have elapsed since the first contribution.