Income tax deductible for geographic mobility

We analyse whether, on the occasion of a new employment contract, you are entitled to the application of the reduction for geographical mobility in personal income tax.

Article 19.2 of Law 35/2006, of 28 November, on Personal Income Tax and partially amending the laws on Corporate Tax, Non-Resident Income Tax and Wealth Tax, (BOE of 29 November) - hereinafter LIRPF -, provides

"2. The following shall be considered as deductible expenses only

(…).

f) For expenses other than the above, 2,000 euros per year.

In the case of unemployed taxpayers registered with the employment office who accept a job that requires them to transfer their habitual residence to a new municipality, under the conditions to be determined by regulation, this amount will be increased, in the tax period in which the change of residence occurs and in the following one, by an additional 2,000 euros per year.

In the case of disabled persons who obtain income from work as active workers, this amount will be increased by 3,500 euros per year. Said increase will be 7,750 euros per year, for disabled persons who, being active workers, prove that they need help from third parties or reduced mobility, or a degree of disability equal to or greater than 65 percent.

The deductible expenses referred to in this point f) shall be limited to the full return on the work, once reduced by the rest of the deductible expenses provided for in this section.

While Article 11 of the Personal Income Tax Regulations, approved by Royal Decree 439/2007, of 30 March (BOE of 4 August), establishes

"The amount of 2,000 euros per year additional established in the second paragraph of letter f) of article 19.2 of the Tax Law, may be deducted by unemployed taxpayers registered in an employment office who accept a job located in a municipality other than that of their habitual residence, provided that the new job requires the change of said residence.

2. For the purposes of applying the limit provided for in the last subparagraph of Article 19(2)(f) of the Law on Taxation, where the taxpayer obtains, in the same tax period, income from work which makes it possible to take into account a higher deductible expense than that provided for in the second and third subparagraphs of that point (f) and other income from work, the increase in deductible expense shall be attributed exclusively to the full income from work indicated in the first subparagraph.

As a general rule, the increase in deductible expenditure due to geographical mobility is conditional upon the taxpayer's actual change of residence to a new municipality, other than that of his habitual residence, and upon the new job requiring such change. In addition, the requirement that the taxpayer must be unemployed and registered with an employment office must be met prior to acceptance of the new job requiring the transfer of the taxpayer's habitual residence.

Proof of new residence

In this sense, it should be noted that, the simple registration is not considered by itself a sufficient element of proof of residence and habitual abode in a certain locality, nor is the fact of moving or maintaining the tax domicile in a certain place.

The specification of such change of residence and its necessity is a matter of fact. The taxpayer must be able to prove compliance with all the aforementioned requirements by any means of evidence admitted in law in accordance with the provisions of Article 106 of Law 58/2003, of 17 December, on General Taxation (BOE of 18 December), and the evidence provided to the management and inspection bodies of the Tax Administration must be assessed.

If the above requirements are met, the appropriate increase in deductible expenses will be applied, depending on the status of the taxpayer, an increase which, in accordance with that article, will be applicable in the tax period in which the change of residence occurs and in the following one.