All interest (from accounts, deposits, bonds, etc.) and all dividends you receive are part of your income and must be declared in your income tax return. The types of income that fall under each category are:
Interest: Bank accounts, deposits, bonds or debentures, and loans you make to third parties.
Dividends: Payments you receive as a shareholder of a company, or distributions of profits from funds or similar entities.
There are other types of income that can be confusing and are not considered interest or dividends, such as free shares (when the bank gives you new shares at no cost), dividends from companies under very specific special regimes, or income from assets used exclusively in your professional activity (very specific cases).
How are these interests and dividends taxed in my Income Tax Report?
These incomes are included in the savings base and are therefore taxed under a different scale than other types of income. This scale can change slightly each tax year, but it is usually as follows:
- 19% for the first €6,000
- 21% from €6,000 to €50,000
- 23% from €50,000 to €200,000
- 27% from €200,000 to €300,000
- 28% for amounts above €300,000
My bank has already withheld part of this Income. What should I do?
Typically, when you receive interest or dividends, the bank withholds a percentage. This withholding acts as an advance payment of your tax. When filing your tax return, this amount is subtracted from what you owe or increases your refund.
Can I deduct any expenses related to this income?
Only very specific expenses can be deducted, such as administration or management fees directly related to these financial products. Transaction fees for buying and selling shares cannot be deducted here, as they affect capital gains/losses, not income.
What if I have losses?
If you have negative returns (for example, financial products with a negative balance), these can usually be offset against other positive returns in the savings base, within certain limits. This can reduce the amount of tax you pay.
What if I receive interest and dividends from foreign accounts or products?
These are also considered taxable income and must be included in your tax return. Taxation is the same, and if a withholding tax was applied in the country of origin, you may be able to claim it as a tax credit, similar to interest and dividends from Spanish entities.
What documents do I need to declare them?
- For income from Spanish entities, Hacienda usually already has all relevant information in your tax records. However, each entity typically issues an annual statement summarizing this data.
- For income from foreign entities, you need to obtain the annual or fiscal statement for the corresponding year, as the Spanish Tax Agency does not automatically have this information (although later, information exchange agreements may provide it).
What are stock options and how are they taxed in my Income Tax Report?
Stock options are rights to buy company shares, usually at a price below market value and within a certain period. The grant of these rights is considered employment income in kind and must be included in your tax return only when exercised, i.e., when the shares are acquired. Therefore, if the option is never exercised, there is no obligation to declare anything. This applies to both Spanish and foreign companies.
In summary:
- Tax is triggered only at the time of exercise, not at the grant of the option.
- Withholding by a Spanish company is calculated on the difference between the market value and the strike price.
- The exempt limit of €12,000 applies only if general criteria are met. For startups, it can reach €50,000, but only if the company meets the Startup Law requirements and the options are granted widely.
If the acquired shares are later sold, a capital gain or loss is generated, included in investment income, and taxed on the difference between the sale price and the acquisition cost (price paid plus the income already declared at exercise).