4857

Hello, I have been told that when submitting returns for tax year 2015 that the Hacienda no longer recognises Renta Vitalicia whereby you only had to declare 25% of an annuity.
Can anybody confirm this?

Thanks,
Michael

Fred James

I have just completed my tax return and there is no difference from last year. I just enter the discounted annuity amount in the relevant box the same as I have done for years.

4857

My accountant confirmed with the Hacienda in Madrid that the full ammount of the annuity now has to be declared.

Fred James

From my experience of Spanish accountants, they have no idea about how annuities work. Many people have been wrongly advised for years. The tax rules clearly state that you only pay tax on the discounted amount.

I shall carry on putting in the net amount. There is no way they will know whether it has been discounted or not as there is no requirement to give any backup documentation at all for any income. There is no way you are able to enter the date you took the annuity, so there is no way the program can work out the net amount so if you put in the full amount you will be taxed on the full amount which is clearly wrong as the law says that you only pay based on a percentage.

4857

Thanks for your replies Fred. I gave my accountant my P60 from Standard Life. In previous years he has applied the 25% wihout problems. He now says the tax law has changed regarding this and that the full ammount has to be entered.

Fred James

Nothing has changed in the Renta Guide.

Seguros de rentas
1.º Seguros de rentas vitalicias inmediatas [Art. 25.3 a) 2º Ley IRPF]
En el caso de rentas vitalicias inmediatas, que no hayan sido adquiridas por herencia, legado
o cualquier otro título sucesorio, se considerará rendimiento de capital mobiliario el resultado
de aplicar a cada anualidad los siguientes porcentajes:
- 40 por 100, cuando el perceptor tenga menos de 40 años.
- 35 por 100, cuando el perceptor tenga entre 40 y 49 años.
- 28 por 100, cuando el perceptor tenga entre 50 y 59 años.
- 24 por 100, cuando el perceptor tenga entre 60 y 65 años.
- 20 por 100, cuando el perceptor tenga entre 66 y 69 años.
- 8 por 100, cuando el perceptor tenga 70 o más años.

Those are the discounts depending on the age you took the annuity.

Incidentally, there was never a 25% discount as you can see from the table above.

There may be a new way of entering the data and the age you took it, but I haven't come across it.

4857

Thanks again Fred. Will go back to my accountant in the morning.