Personal income tax (IRPF)


The Personal Income Tax, also known by its acronym, IRPF, is a personal, progressive and direct tax present in Spanish taxation whose mission is to tax the income obtained in a calendar year by individuals residing in the country .

Personal income tax was introduced as a tax tool within the tax reform that was developed in Spain in 1978. Furthermore, it is a tax closely related to the requirement of contribution to the common welfare referred to in the Spanish Constitution in its article 31: “support of public expenditures in accordance with their economic capacity through a fair tax system inspired by the principles of equality and progressivity that, in no case, will have confiscatory scope”.

Since its introduction, personal income tax has undergone different model variations, adapting to the needs or mandates of each government. As the leaders change, their fiscal policies and their political and social objectives change, turning the personal income tax into a mechanism of habitual use when doing politics and an essential pillar in Spanish taxation.

Who is affected by the personal income tax (IRPF)?

For practical purposes, this tax affects income from work and capital, income from economic activities, capital gains and losses, and income imputations established by law.

It is important to emphasize that personal income tax affects any taxpayer who carries out their activity within Spain, regardless of where the operations take place or their nationality.

Personal income tax characteristics

This tax is said to be of a progressive type because it works in such a way that the more money someone earns, the more tax they will have to take. In other words: the more you earn, the more tax you have to pay. To carry out this calculation, the Administration uses the tax rates, different according to the level of income that the citizen has had that calendar year.

In this way, a person who has obtained returns of 10,000 euros will pay a lower percentage of taxes for them than someone who moves in a higher figure, such as 100,000 euros for example.

Another of the main characteristics of personal income tax is that it is direct. This is because it falls directly on each citizen as a person. On the other hand, according to Spanish legislation, the management of this tax falls partially on the autonomous communities.

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