Tax query

Old Jan 31st 2015, 11:43 pm
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Default Tax query

There is an article in this weeks EW about tax and a "wage earners deduction" of 2000euros each on the example given. Is that the same as the earned income allowance? For a couple I had the sum of 2652 euros (but that may have changed). Also that the personal allowance for 2014 is now 5550. What would be the PA for a couple? Has that changed from 5151+3400 euros? On the example given of a total income of 30000 euros it states tax is paid at 20%. The article seems very confusing as it lumps all the incomes together for a couple but appears to my untrained eye that the allowances used are for a single person and just doubled and doesn't use the married couples allowance which are different.
Also if I am tax resident this year and complete my tax return in 2016 for 2015, then when do I submit the Modelo 720 form. Thank you for any advise and up to date information
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Old Feb 1st 2015, 12:22 am
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Default Re: Tax query

I couldn't find the article so I cannot comment on its accuracy, but EWN tends to get these sort of articles wrong more often than they get them right!

Firstly the changes apply to this years earnings so the first tax declaration using these figures will be in 2016.

Personal allowances have all increased but the earned income allowance has changed significantly. It used to be a variable amount, depending on your income, of between €4080 and €2652. This has been reduced to €3700 decreasing to zero when your income exceeds €14450.

There is a new allowance of €2000 for "workers" but I am assuming that includes pensioners as their income has always been treated as income from work. This will offset the loss of the €2652 to some extent. In the case of joint declaration the second personal allowance stays at €3400.

The tax bands have all been revised and the lowest rate is now 20%, but the band is shorter than previously.

If you become tax resident in 2015 then you will have to submit the form 720 in March 2016 for your foreign assets as at 31/12/2015
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Old Feb 1st 2015, 11:58 pm
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Default Re: Tax query

Thanks Fred. My husband has a small private pension, but added to mine makes for a larger joint income.(We are pre retirees) If we were taxed as a couple would we each be allowed the 2000 euros as well as 8950 personal allowance (5550+3400)? Also do you know what the tax bands are now and is the amount in each tax band the amount you are taxed on after all the allowances are applied or total income before allowances.
Has tax on interest from savings changed as well and would you know the bands for that? Is savings income still taxed separately from earnings/pension income?
Confused as ever, just when we thought we understood how we would be taxed!! Thank you for any advice you can give
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Old Feb 2nd 2015, 12:24 am
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Default Re: Tax query

No, you would only get one €2000 allowance.

Joint declarations rarely are beneficial if you both have some income - better to be taxed separately as you get a far bigger allowance that way. You don't have to make a choice, the tax program calculates both and you choose the option that shows less tax.

The new starting tax band is from 0-12450 and it is 20%. The next band is up to 20200 and that band is 25%

You are effectively taxed on your income after allowances, although the actual calculation is a bit more complicated than that.

Savings income (which also includes income from pension annuities) is taxed separately from earned income. The first 6000 is taxed at 20% and from 6000 to 50000 the rate is 22%.

Remember, these rates apply to income during 2015. The tax declarations that become due by the end of June this year apply to 2014 income and will be taxed at the old, higher rates with the old allowances.
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Old Feb 2nd 2015, 1:01 am
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Default Re: Tax query

I think and kindly so that Fred mentioned some time ago that registered disabled persons have a special allowance dependent upon level of disability. Although I am not sure of the bands.

In France and in recognising serious illness they give 2.5 parts of allowances to provide for supportive systems as against the normal 2.0 parts. It does help taxation wise but not obviously for the person suffering from the illness.

thanks Fred
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Old Feb 3rd 2015, 10:15 pm
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Default Re: Tax query

Thanks Fred for the advice
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