Ten actions to lower the income statement amount

Each year, as the end approaches, it’s time to think about what can be done to reduce taxes when the income statement is filed. Also maybe you want to know How To Invest Business Profits To Avoid Taxes?

These tips will help reduce the amount.

Habitual residence deduction

If you purchased your home before 2013, you may be able to deduct the amount you pay each year for the mortgage loan. If the total amount you have paid in the past year is less than this, your bank may allow you to make an additional amortization on your mortgage loan, up to the maximum amount of EUR 9,040.


Contributions to pension plans

It is time to contribute if you have one already. A percentage of the total amount contributed to the plan each year can be deducted. This is equivalent to 30% of your earnings from work or economic activities. This limit will be reduced to 2,000 euro starting next year.

The savings shown in the income statement is the amount that you have contributed to the fund using your income tax percentage. Variable based on your income volume.

Avoid bailouts of a pension plan

To determine if you can redeem money from your pension plan (or recover it) before the end of the year, you need to first assess your income for the current year. It is better to get money out of a pension plan in a year when the beneficiaries have a low income to avoid moving to a higher income bracket and therefore a higher tax rate.

Allowance to deduct investment in new or newly created companies

You can subtract 30% from the amount invested in your income statements if you wish to invest the capital you have saved in a startup or newly formed company that is less than 3 years old.

If you sell your shares in these companies after three years and make a profit, the capital gain is exempted from tax if you reinvest it into another company with the same conditions.

Compensation of gains with capital losses


Capital losses can be offset by other capital gains, such as the sale of shares and real estate. These losses can be offset for the next four years by the law.

Additionally, if you’re interested in transferring assets with capital gains or that provide benefits greater than 200,000 euros, you should do it before the end of the year. The 23% tax rate is lower than the 26% starting in 2021.

Deduction for donations


It is a great time to make contributions to foundations, associations, and NGOs. They also deduct taxes from your income statement.

  • Deduct 10% from donations if the organization isn’t regulated by that law.
  • You can deduct 80% from the first EUR 150 and 35% for the remainder of the organization is regulated. .

Contributions to political parties are exempt from the deduction

Contribute money to political parties if you feel it is in your best interest. You can deduct 20% from the membership fees to a maximum of EUR 600 each year.

Bonuses for over 65s


You are 65 years old or older. The first thing you need to know is that you do not have any experience. Capital gains from the sale of assets (real estate, shares, and rights) are exempted from taxes, provided that the amount is used in the creation of a life annuity for yourself within less than six months.


You might also want to look at other options

If you have earned income from work, real property capital, and economic activities exceeding EUR 300,000. it is possible to advance income before the end of 2021. With the tax reform, the Treasury is finalizing the tax Marginal personal Income Tax. This amount will increase from 45% to 47% which will mean we pay more taxes.

ERTE and benefit for cessation of activity


Also, You have likely filed the income statement this year if you have been in ERTE.

You will also have to pay the portion of the income that was not subject to withholding. You have the option to request that your company withhold more income to reduce the payment. If you are still in ERTE you can ask the SEPE for an increase in withholding.

You may have your undue ERTE charges and other benefits rescheduled before the end of the year. You can declare the actual amount that you received and not the overpaid amounts. .

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