The issue about the obligation to declare interest on bank deposits in IRS has raised doubts in recent months. Initially, the government announced that, from 2024, taxpayers who received more than 500 euros in interest rate interest rates or aforro certificates would have to declare them. However, this measure was later revoked.
What has changed?
According to the revocation of this obligation was made official with the publication of the law on March 6, eliminating the need to report these income in the IRS statement.
The decision followed several criticism of the immediate application of the measure and the impact on taxpayers who resort to automatic IRS.
The Consumer Protection Organization recalls that, initially, the government intended to income from capital subjects subject to release fees exceeding 500 euros to be declared, as well as other tax -free income, such as food allowances and cost aids within legal limits. However, the measure was reversed after analysis by the Tax Authority (AT).
Is it still necessary to declare interest?
For this year’s IRS declaration, interest on time deposits and certificates of aforro do not need to be declared unless the taxpayer opts for the encompassing.
This is because banks and financial institutions already apply a 28% automatic retention on these income, so taxation is automatically regularized.
If the taxpayer chooses to encompass these income with other amounts subject to IRS, he may benefit from a more favorable tax framework, depending on his global tax rate.
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What is the encompassing and when it pays off?
The encompassing allows us to add all capital income (such as interest and dividends) to the remaining taxpayer income, subjecting them to the progressive IRS rates rather than the fixed release rate of 28%.
This option may be advantageous for those who have a lower collected income as it may benefit from a lower tax rate.
However, each case should be analyzed individually, and a simulation is recommended before submission of the statement.
Conclusion
With the revocation of the measure, the interest rates on time deposits and certificates of aforro need not be declared in the IRS of 2024, unless the taxpayer chooses to encompass.
The decision to encompass or should not be considered based on the fiscal situation of each person, and it is advisable to resort to a simulator or an accountant to evaluate the best option.
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