How profits from bills, deposits or paid accounts are taxed in personal income tax

Taxation can play an important role when deciding on a savings product. The client must take into account what percentage of the remuneration obtained with deposits, bills or funds will have to be dedicated to the payment of taxes to the treasury and how to pay this amount, since the change from gross to net can make a big difference.

The modifications in the withholdings of the Personal Income Tax (IRPF) have caused an increase in the rates applied on savings. In order to efficiently plan family finances and be able to predict the remuneration that will be obtained, it is necessary to take note of these developments, with which the tax on the highest benefit bracket reaches 28%.

Most of the interest received on savings products is considered capital gains and a minimum tax rate of 19% is applied up to the first 6,000 euros. The bracket between 6,001 and 50,000 euros is taxed at 21%, while the next, from 50,001 to 200,000 euros, is taxed at 23%. 27% is withheld from salaries between 200,001 and 300,000 and a rate of 28% is applied from this amount onwards.

Taxation of deposits, remunerated accounts and gifts

The returns obtained from bank deposits and interest-bearing accounts offered by financial institutions are returns on movable capital, and are therefore included in the savings tax base. As such, its interests are taxed at the established rates.

In this case, the withholding is normally made by the bank itself when paying the client for the corresponding import. Thus, upon receiving remuneration from an account or importing a deposit with interest, the bank will have already deducted the account payable in taxes and will pay that amount to the treasury. The bank applies a withholding of 19% automatically, and the difference must be corrected in the income tax return if the profits exceed 6,000 euros.

Remuneration or gifts in kind that entities give for, for example, opening an account with them, are also subject to tax. Specifically, the withholding is also 19% up to 6,000 euros and banks usually apply it automatically. Even so, it is advisable to request a withholding certificate detailing the value of the gift and taking into account which side, the client or the bank, is the responsibility of the Treasury.

What taxes are paid on products from foreign banks

Many Spaniards prefer to opt for offers from international banks due to the better returns on, for example, deposits, but doubts about the taxation of these products are a problem. Banks in other countries also apply automatic withholdings to remuneration, so it is important to notify the entity that it is already taxed in Spain. By issuing a tax residence certificate we can ensure that we are not taxed twice by the Treasury institutions of both countries.

How Treasury Bill gains are taxed

The returns on Treasury Bills are taxed like the rest of the returns on movable capital, so a tax of 19% is applied to the first 6,000 euros, which increases progressively with the importation of earnings. However, the Public Treasury does not make a withholding on account when paying the face value of the Bills to the buyer, so the gross amount, not net, that corresponds to it is received. When filing the income tax return, the beneficiary will have to take care of accounting for the benefit obtained and the corresponding tax payment.

Taxation of investment funds

Unlike the previous ones, investment funds are considered capital gains or losses, although they are also within the savings tax base and the rates that apply to each section are the same. Therefore, the withholding applied this year has also been 19% and will remain that way for the first 6,000 euros of profitability obtained.

The owner of a fund will only be obliged to pay taxes on his profits at the time he redeems the units. Therefore, the client can make transfers and move savings from one share to another without having to pay the Treasury, allowing a greater degree of portfolio adaptability.

How pension planes are taxed

The benefits obtained by pension planes, on the other hand, are taxed as income from work in personal income tax. Therefore, a rate of 19% is applied to the first 12,450 euros, 24% to the section between that amount and 20,200 euros and 30% between 20,200 and 35,200 euros. The fourth tranche, which goes up to 60,000 euros, has a tax of 37%. Between 60,000 euros and 300,000 the tax rate is 45% and above that level it is 47%. In these cases, the participant will only have to pay taxes on them when rescuing their pension plan.