Spanish Government Exempts Unemployed from Income Tax Declaration for 2024
The Ministry of Labor clarifies that unemployment benefit recipients are not required to file tax returns in 2025 amid regulatory updates.
The Spanish Ministry of Labor has confirmed that individuals receiving unemployment benefits will not be required to submit an income tax declaration for the 2024 fiscal year, which would have been due starting this April.
This decision stems from a recent internal instruction issued by the Public Employment Service (SEPE), interpreting the application of Royal Decree-Law 2/2024, which reformed unemployment benefits.
Initially, the reform mandated that all applicants and recipients of unemployment benefits filing for the fiscal year 2025 must file an income tax return, with penalties for non-compliance, including possible loss of benefits.
The Ministry has amended its position, indicating that the regulatory changes took effect on November 1, 2024. Consequently, no such obligation existed for the first ten months of the previous fiscal year.
However, it is important to note that this exemption only applies for 2025, meaning the requirement to file taxes will be enforced starting in 2026 unless a similar instruction is issued next year or the Royal Decree-Law is modified.
Beneficiaries of unemployment benefits will be required to file a tax declaration regardless of their income if no additional regulatory guidance is provided.
Previously, those whose income fell below a specified threshold were exempt from filing.
The Ministry defended the rationale for this tax declaration requirement, indicating that it would help maintain administrative awareness of individuals typically not filing taxes due to low incomes.
This information could facilitate more targeted and efficient public policies.
Nonetheless, the Ministry acknowledges that this regulation adds an administrative burden and may lead to tax liabilities for individuals who had lower withholding amounts during the year than required.
This reform was also a request from the European Union to access a portion of recovery funds as part of the Recovery Plan.
Currently, those unemployed who receive contributory or assistance benefits are exempt from filing an income tax declaration in 2025 if their annual net income is below €22,000, with a threshold of €15,000 for individuals receiving income from two payers where one has paid over €1,500.
Also, as in previous years, self-employed individuals and those receiving the Minimum Vital Income (IMV) will be required to submit a tax declaration, irrespective of their income levels.
The path to the implementation of this Royal Decree-Law faced various challenges post-approval.
Initially rejected by the Podemos party in January 2024, the decree was repealed after one month.
Subsequently, the Ministry of Labor reintroduced the decree months later, incorporating Podemos's demand to maintain the social security over-contribution for unemployed individuals over the age of 52, leading to its eventual approval in May and publication in the Official State Gazette.
A key feature of the decree, negotiated with labor unions CCOO and UGT, which was not endorsed by employer organizations CEOE and Cepyme, involves a stepwise increase in unemployment subsidy amounts up to €570 per month (95% of the Public Indicator of Multiple Effects Income, IPREM).
However, these amounts decrease over time during the benefit period and are applicable only to those who apply for benefits after November 1, 2024, expanding the pool of beneficiaries and allowing for compatibility between subsidies and wages, termed the 'new employment support complements.'
This decision stems from a recent internal instruction issued by the Public Employment Service (SEPE), interpreting the application of Royal Decree-Law 2/2024, which reformed unemployment benefits.
Initially, the reform mandated that all applicants and recipients of unemployment benefits filing for the fiscal year 2025 must file an income tax return, with penalties for non-compliance, including possible loss of benefits.
The Ministry has amended its position, indicating that the regulatory changes took effect on November 1, 2024. Consequently, no such obligation existed for the first ten months of the previous fiscal year.
However, it is important to note that this exemption only applies for 2025, meaning the requirement to file taxes will be enforced starting in 2026 unless a similar instruction is issued next year or the Royal Decree-Law is modified.
Beneficiaries of unemployment benefits will be required to file a tax declaration regardless of their income if no additional regulatory guidance is provided.
Previously, those whose income fell below a specified threshold were exempt from filing.
The Ministry defended the rationale for this tax declaration requirement, indicating that it would help maintain administrative awareness of individuals typically not filing taxes due to low incomes.
This information could facilitate more targeted and efficient public policies.
Nonetheless, the Ministry acknowledges that this regulation adds an administrative burden and may lead to tax liabilities for individuals who had lower withholding amounts during the year than required.
This reform was also a request from the European Union to access a portion of recovery funds as part of the Recovery Plan.
Currently, those unemployed who receive contributory or assistance benefits are exempt from filing an income tax declaration in 2025 if their annual net income is below €22,000, with a threshold of €15,000 for individuals receiving income from two payers where one has paid over €1,500.
Also, as in previous years, self-employed individuals and those receiving the Minimum Vital Income (IMV) will be required to submit a tax declaration, irrespective of their income levels.
The path to the implementation of this Royal Decree-Law faced various challenges post-approval.
Initially rejected by the Podemos party in January 2024, the decree was repealed after one month.
Subsequently, the Ministry of Labor reintroduced the decree months later, incorporating Podemos's demand to maintain the social security over-contribution for unemployed individuals over the age of 52, leading to its eventual approval in May and publication in the Official State Gazette.
A key feature of the decree, negotiated with labor unions CCOO and UGT, which was not endorsed by employer organizations CEOE and Cepyme, involves a stepwise increase in unemployment subsidy amounts up to €570 per month (95% of the Public Indicator of Multiple Effects Income, IPREM).
However, these amounts decrease over time during the benefit period and are applicable only to those who apply for benefits after November 1, 2024, expanding the pool of beneficiaries and allowing for compatibility between subsidies and wages, termed the 'new employment support complements.'
Translation:
Translated by AI
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