Contributions to social security systems, types and amounts that reduce the taxable base of the tax.
There are different savings options on the market, but only those that meet certain technical requirements are considered savings plans that entitle you to reduce your taxable income for personal income tax purposes by the amount of your contributions:
1.- Pension plans.
2.- Mutual social welfare societies
3.- Guaranteed pension plans
4.- Company social welfare plans
5.- Private insurance policies that exclusively cover the risk of severe or total dependency
6.-Social security systems for the spouse.
Contributions made by the company to pension plans, which constitute remuneration in kind despite not being subject to withholding or payment on account, may also be eligible for reduction.
Can I make contributions to more than one pension plan?
There is no limit to the number of pension plans you can subscribe to; you can subscribe to as many as you wish as long as you do not exceed the financial contribution limit (currently €8,000)
What is the contribution limit that will be subtracted from the taxable base?
The combined tax limit for reductions in business contributions and payouts will be the lower of the following amounts:
- a) 30 percent of the sum of the net income from work and economic activities received individually in the year.
- b) 8,000 euros annually and, in addition, 5,000 euros annually for group dependency insurance premiums paid by the company.
What happens if I make contributions that exceed the limit I can deduct?
If contributions have been made during the tax year that could not be deducted from the taxable income due to insufficient income or because they exceeded the percentage limit, you can request that the unreduced excess be carried forward to the following five tax years. This outstanding excess will be the first to be taken into account for reducing the taxable income of the first taxable year in which there is income, and the contributions made during the tax year in question will be added back, again respecting the tax limits for reduction.
However, if excesses from previous years have not been reduced for reasons other than insufficient tax base, the right to reduce outstanding balances in subsequent years is lost.
What if my spouse has no income, but I want to ensure their retirement?
If my spouse has no income from work or any economic activity, or receives it in an amount less than 8,000 euros per year, but has subscribed to a social security plan, independently of the contributions I make to my own social security plan, I will be able to reduce from my taxable income the contributions made to my spouse's plans, with the maximum joint limitof 2,500 euros per year.
Furthermore, these contributions are declared not subject to Inheritance and Gift Tax.
There are other cases that allow the reduction of the taxable base of the IRPF such as the contribution to social security plans for disabled people or to protected assets of people with disabilities.
If you would like more information or have any questions about reducing your taxable income before the end of the tax year, you can contact the professionals at Ambit Assessor and optimize your personal income tax.
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A graduate in Business Administration from the University of Barcelona, she has furthered her training in tax and accounting by attending courses and seminars offered by the EAE Business School, the College of Economists, the Bar Association, and the Terrassa Chamber of Commerce.
She combined her studies with work in the family business and as a substitute in the production audit department of Bimbo SA.
She has spent her professional career at Àmbit Assessor, where she joined in 1991 to support the accounting and tax department, becoming a consultant a few years later.
Since 2000, she has been the managing partner of the company.
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