Income Tax Basque Country

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

(80 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: Vizcaya, Álava and Gipuzkoa: 20% to 2,500 euros, 21% from 2,500.01 euros to 10,000 euros, 22% from 10,000.01 euros to 15,000 euros, 23% from 15,000.01 euros to 30,000 euros and 25% from 30,000.01 and above. 

There are no longer reductions of 40% and 50% for interest with a generation term of more than 2 and 5 years, respectively. No other additional compensation has been provided for, even if the deposits had been opened before 12.31.2006.

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

Dividends and interest

The full amount will be included in the tax base of the savings, taxed at the rates on the following scale: 

Vizcaya, Álava and Gipuzkoa: 20% to 2,500 euros, 21% from 2,500.01 euros to 10,000 euros, 22% from 10,000.01 euros to 15,000 euros, 23% from 15,000.01 euros to 30,000 euros and 25% from 30,000.01 and above. 

In the case of dividends, it is important to bear in mind that the first 1,500 euros are tax-exempt. While this exemption does not apply to dividends from stock acquired in the two months previous to dividend payment if a transfer of homogeneous stock takes place in the subsequent two months. These terms are for one year in the case of unlisted stock. Nor does the exemption for dividends distributed by Collective Investment Institutions apply. 

Costs deductible from returns: There are no deductible costs. 

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. There are no longer reductions of 40% and 50% for returns generated in more than 2 and 5 years, respectively.

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 updated acquisition value by applying the corresponding coefficients. To determine the acquisition value, the amount of the pre-emptive rights transferred prior to January 1, 2012 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. 

Effective from January 2012, it should be noted that, even if you are a stockholder in a listed company, if said company has carried out a capital increase, in the event of the sale of your pre-emptive rights, the amount of said sale will be considered to be capital gains in the tax period in which said transfer occurs. 

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 2006. If the transfer value of the stock is equal to or greater than the average price in the last quarter of 2006, 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. 

Remember that, regardless of the age of the stock transferred, the capital gain or loss is included in the tax base of the savings, taxed at the following rates: 

Vizcaya, Álava and Gipuzkoa: 20% to 2,500 euros, 21% from 2,500.01 euros to 10,000 euros, 22% from 10,000.01 euros to 15,000 euros, 23% from 15,000.01 euros to 30,000 euros and 25% from 30,000.01 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 updated acquisition value by applying the corresponding coefficients. 

Remember 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 12.31.2006. If the transfer value of the stockholding is equal to or greater than the net asset value at 12.31.2006, 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. 

Remember that, regardless of the age of the stock transferred, the capital gain or loss is included in the tax base of the savings, taxed at the following rates: 

Vizcaya, Álava and Gipuzkoa: 20% to 2,500 euros, 21% from 2,500.01 euros to 10,000 euros, 22% from 10,000.01 euros to 15,000 euros, 23% from 15,000.01 euros to 30,000 euros and 25% from 30,000.01 and above

The benefits received in the form of capital generate capital gains, 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 12.31.2006 benefit from the reduction of 14.28% applied for each year of age that exceeds two at 12.31.96. 

The returns obtained will be included in the tax base of the savings, taxed at the rates on the following scale: Vizcaya, Álava and Gipuzkoa: 20% to 2,500 euros, 21% from 2,500.01 euros to 10,000 euros, 22% from 10,000.01 euros to 15,000 euros, 23% from 15,000.01 euros to 30,000 euros and 25% from 30,000.01 and above. 

There are no longer reductions of 40% and 75% for returns generated in more than 2 or 5 years, respectively. However, a tax compensation mechanism has been provided for insurance policies taken out before January 1, 2007, consisting of a deduction in the tax payment for the positive difference between the amount resulting from applying the tax rates on the savings to the total amount of the return and the theoretical full amount that would have resulted from having included the returns, once reduced, in the general net tax base. For the purposes of the possible application of the aforementioned compensation, we are sending you additional information in which the reduction applicable to said purposes has already been calculated. 

Note: In Guipúzcoa and Álava, since January 1, 2016, the tax compensation in individual life or disability contracts taken out before January 1, 2007 has been eliminated. 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:

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

They are tax deductable, with the following individual limits per stakeholder: Three provincial councils are unified, with the same limits being established: 

1. €5,000 yearly. 
2. For business contributions (Employment Plans) 8,000 euros.

The combined limit of both contributions (a+b) is 12,000 euros. 

When contributions are made by the stockholder and by the promoter during the tax period, the reduction for the contributions by the promoter will be applied first, then the contributions by the stockholder, where applicable. 

Residents of the Basque Country may only contribute the financial limit of €8,000 to IPPs. If you want to continue contributing, you need to do so in an EPSV.

If your spouse does not receive income to be included in the general tax base or receives income of less than €8,000, you can deduct the contributions made to your spouse's EPSV or plan, with a limit of €2,400 per year. 

Any contributions that cannot be deducted because they exceed the limits above, or because the General Tax Base is not large enough, may be transferred to the next five fiscal years, respecting said limits, while said option is limited to the fiscal year before the retirement. From that time on, a reduction to the tax base will not be possible.

The benefits received are considered to be personal earned income for all purposes (withholdings, allowances on earned income), and are included as such in the general tax base. 

However, if they are received in the form of capital and more than 2 years have passed since the first contribution or it is an invalidity benefit, 60% will be included in the general tax base (i.e. with a prior reduction of 40%) with a maximum of 300,000 euros. This period of 2 years will not apply in the case of disability or dependency benefit. 

Furthermore, the benefits in the form of capital received five years after the previous benefit (prior to January 1, 2012) will also have a reduction of 40% provided that the contributions paid follow a determined regularity and frequency. 

Remember that there are specialities in the event of contributions and benefits from Pension Plans and EPSV's made in favor of people with disabilities.

The acquisition value update coefficients applicable to transfers made in 2015 are as follows: