Author: Büşra Yaren Güney
Publication date: 13.09.2023
According to the principle of saving on taxation, taxation is the lowest possible level of tax collection costs. Infact, it would be more correctfor us to examine the issue in two different dimensions.
Dimensions of Taxation
How many euros the state spends while collecting 100 euros in taxes.
Hidden costs of collecting taxes imposed on the citizen.
In addition to the tax paid by the citizen to the state, the citizen also incurs costs in order to comply with the obligations arising from the tax legislation.
Expense elements of Tax Collection
Now let’s take a look at the expense elements that are included in the cost in the tax collection cost account. This situation may vary from country to country. For example, in some countries, expenses incurred by the customs administration are included, while in others they are not included.
Therefore, as the tax system develops and becomes fairer in actual taxation ,the cost of collecting taxes must be expected to increase. However, taking into account that costs may increase due to inefficiency, it is not possible to say that the tax system is fairer in all cases.
Tips on how to save taxes
You can take advantage of the Beckham law in Spain.
What is the Beckham law?
The increasing tax rate (19-45%) of foreigners moving to the territory of Spain on their worldwide income. This is a special tax regime that allows them to pay a flat rate of 24% on income earned only in Spain.
Basically, this special tax regime for foreigners makes it possible to pay much lower taxes and therefore save a large amount of money. The method is valid for all workers who have a residence abroad and want to work in Spain. It allows them to pay income and wealth tax for the first 6 years as if he/she were residing abroad.
This normative is regulated in section 93 of the Spanish Income Tax Code.
If your employer is abroad, pay non-resident taxes.
Married couples in Spain can submit a common tax return. This is also a very useful method.
The tax-free allowance is a way you can use if you have children and you are a parent living in Spain. If you have children under the age of 25 living with you, you can get a tax-free allowance for each child. What happens if your child is under the age of 3 and both parents are working? You can get an allowance of 2,800 euros per child.
Disability allowance is calculated according to a rating system. The exemption varies by degree.
Bonus tip: If you are a citizen of another country, the bilateral agreements between your country and Spain to avoid double taxation!
In a nutshell, all tax-related issues for both residents and non-residents in Spain are regulated by the Spanish Tax Office, the institution that collects taxes.