Why do I owe money on my Spanish tax return?
The tax withheld from your payslip is an advance payment. If less has been withheld during the year than you actually owe, you pay the difference when you file your return (declaración de la renta).
Most common causes
- Two or more payers: each employer calculates your withholding as if it were your only income. This is the number one cause.
- Receiving unemployment benefit: the SEPE usually applies low withholding.
- Badly adjusted withholding: a mid-year pay rise, a bonus or not updating Form 145.
- Other income: rent, interest, dividends or share sales.
- Personal changes: you reported a child or a disability that later did not apply.
How to avoid it
- Ask your employer to withhold a higher percentage using Form 145.
- If you change jobs, work out the withholding that applies to your total annual income.
- Set some money aside each month if you know you will have other income.