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HomeLatest NewsTreasury bills: how are interest taxed in the Income statement?

Treasury bills: how are interest taxed in the Income statement?

Date: March 29, 2024 Time: 18:27:41

Interest in Spanish public debt has skyrocketed in recent weeks due to the search for savers with the highest profitability for their money. The focus has been on Treasury Bills, whose latest issues have caused long lines at the Bank of Spain or the collapse of the website. But, how are interests taxed in the 2022 Income Statement?

Letters are debt issues made by the State to finance itself in the short term. Specifically, the Public Treasury issues at 3, 6, 9 and 12 months. Through an auction, the interest rate that investors will receive during the term of the title is set. Profitability has been increasing in recent months, as interest rates have risen in the euro zone. Thus, currently, interest is already close to 3%.

This profitability exceeds the offer in most cases by financial institutions through deposits or other financial products. For this reason, more and more investors are buying short-term Spanish public debt. Although the ‘boom’ has been experienced in the first months of 2023, those who already bought the previous year must take it into account to make their Income statement this year.

Income from movable capital in personal income tax

Specifically, the difference between the import obtained from the sale or amortization of the bill -once the term has expired- and the purchase price will be taxed. The result is included as income from movable capital, within the personal income tax (IRPF) savings tax base.

Once all the concepts that the Tax Agency recognizes within the savings base are included, the established tax rates are applied to that amount, which range between 19% and 26%. The first 6,000 euros will be taxed at a rate of 19%, the tranche of the tax base between 6,000 euros and 50,000 euros is taxed at 21% and the tranche between 50,000 euros and 200,000 euros is taxed at 23%. Finally, for income that exceeds 200,000 euros, 26% is taxed.

However, in next year’s income, that is, for all operations that are settled throughout 2023, two new rates will be used based on savings. Between 200,000 and 300,000 a rate of 27% will be applied and from 300,000 euros it will be 28%.

When do you have to declare it in the Income?

In order to include it in the 2022 Income Statement – made in 2023 – the sale or expiration of the Bill must have occurred last year. In other words, for all those who have bought Bills this year, they must wait to declare it when they have obtained the returns. Due to the terms of the Bills, the maturity of those purchased so far will take place in 2024. That is, it will be declared in the Income Statement for that year, which, in turn, will be made in 2025.

Exempt from withholding

To determine the result of the personal income tax settlement, the withholdings made to deduct them must be taken into account. Thus, if the withholdings are higher than the resulting quota to be paid, the investor will receive the excess withheld as a result of the IRPF settlement.

There is no withholding for the yields offered by the Bills, regardless of who the recipient is. From the Public Treasury they remember that “they are exempt from withholding on account both in the field of personal income tax and in that of Corporation Tax, without prejudice to the fact that they must be included in the annual declaration of said taxes”.

Specifically, within the income from the Income, the income from Treasury Bills must be included in the declaration box number 30, income from the transmission or amortization of Treasury Bills. The amortizations of Treasury Bonds and State Obligations must be included in the following boxes, as well as public debt issues, but with longer terms.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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