Spain abolishes requirement for unemployed to file an income tax return

Those receiving unemployment benefits in Spain will not be required to file an income tax return, according to an omnibus Royal Decree-Law published this Wednesday in the official state gazette (BOE). The decree acknowledges that such a requirement “exceeds the intention of the law” and “it is therefore necessary to remove this requirement for recipients of unemployment benefits to file an income tax return”. Back in March, central government had already decided not to require unemployment benefit recipients to file a personal income tax return for 2024, which was due this year, thus postponing this requirement until 2026.

However, according to the BOE, in order to prevent a modification of the tax obligations of the recipients of unemployment benefits through a regulation specific to the social sphere, such as the General Law on Social Security, it is considered necessary to “eliminate this requirement to file an income tax return”. In this regard, it is considered that its current scope is not merely a formal obligation and “exceeds the intention of the regulation”, which was initially set up to provide the entity managing unemployment benefits with an additional source of information.

Increased administrative burden

Furthermore, it was clear that maintaining this requirement would entail a considerable increase in the administrative burden for the approximately 2.5 million new people receiving unemployment benefits, in addition to the burden that handling this volume of additional tax declarations would place on the state tax agency (AEAT).

Central government also pointed out that this new obligation to file a tax return included more than 2.5 million taxpayers as being newly required to file an income tax return, 75% of whom receive unemployment benefits of less than 5,400 euros. Therefore, continuing to oblige them to file an income tax return is not only a formality, but also means that many of these taxpayers are required to self-assess and pay a tax liability that they otherwise would not be obliged to pay according to strict tax regulations. The Spanish government further points out that establishing this requirement could lead to the loss of the right to claim child allowance and therefore considers that “all of the above justifies the need to abolish it immediately”.