As the deadline for annual tax filings approaches, taxpayers are urged to be especially diligent when completing their returns. With over 6.6 million taxpayers preparing to submit their 2024 income tax returns, it is crucial to verify pre-filled information and take full advantage of the new tax deductions and exemptions available. Careless or incorrect completion of forms could lead to higher tax liabilities or missed opportunities for significant tax relief.

Starting Monday, March 17, 2025, the AADE (Independent Authority for Public Revenue) platform will open for the submission of tax returns. Taxpayers will need to file their returns for the previous year using the updated E1 form, which now includes substantial changes. These changes feature new codes and automated processes designed to streamline the filing process.

One of the most significant updates is that approximately 1.4 million taxpayers will receive pre-filled returns from the AADE, which will include data on wages, pensions, real estate, vehicles, and benefits. These pre-filled returns will be sent digitally through the myAADE platform, as well as by email. Taxpayers are advised to carefully check these returns within the specified period.

If no changes are made, the AADE will automatically submit the returns for salaried employees and pensioners. Therefore, it is crucial to confirm the accuracy of pre-filled data. If any mistakes or omissions are found, taxpayers can submit a correction up until July 15, 2025, to update the necessary information.

New Codes and Tax Reductions

The updated E1 form introduces several new codes related to tax exemptions and reductions. These changes are designed to benefit specific categories of taxpayers, such as those who rented out previously vacant properties in 2024 or shifted their real estate from short-term to long-term leases. New provisions are also available for workers in the hospitality sector who received tips and for professionals meeting certain population criteria, allowing them to reduce their imputed income by 50%. These changes aim to ensure a fairer distribution of the tax burden and to stimulate economic activity.

Where should taxpayers focus their attention? Here are the most important codes:

• Codes 119-120: These apply to taxpayers who rented out vacant properties or converted short-term leases to long-term leases after September 8, 2024. Taxpayers in this category can benefit from a 36-month tax exemption, provided the property remains leased and is not re-rented for short-term leases. Additionally, proper reporting of rental information and contracts with at least a three-year duration are essential for the exemption.
• Codes 689-690 and 691-692: These codes allow hospitality workers to report tax-exempt tips up to 300 euros per month. Any amount exceeding this limit, or tips paid as part of their salary, will be subject to taxation. Ensuring these amounts are accurately reported is critical to avoid additional tax burdens.
• Codes 047-048: These codes allow a 50% reduction in imputed income for taxpayers whose primary residence or business is in settlements with fewer than 500 inhabitants or islands with fewer than 3,100 residents. The reduction also applies to large families, single-parent families, and limited taxi owners. It’s crucial to check eligibility and report the correct information for this reduction.

Key Changes and Exemptions

• Abolition of the Business Tax (Tef): One of the most notable changes is the removal of the business tax, with codes 027-028 now deleted. This change brings relief to individuals engaged in business activities. Additionally, stamp duty has been replaced with a digital transaction fee, recorded under codes 741-742. Taxpayers must ensure the accurate reporting of the digital fee to avoid errors during the tax return processing.

Deadlines and Discounts

Taxpayers can pay their income tax in eight monthly installments, with the first payment due by July 31, 2025. There is also the option of a lump-sum payment with a discount of up to 4% if paid by April 30, 2025. The discount reduces to 2%-4% depending on when the payment is made, with the latest deadline for lump-sum payments being the end of July. Choosing the correct payment method can provide significant financial relief.

Final Thoughts

Taxpayers should be especially careful when completing their returns, focusing on the new codes and taking full advantage of the deductions and exemptions available. Timely and accurate submissions can help reduce the overall tax burden and prevent unpleasant surprises during the tax return settlement process. The key filing dates to remember are March 17, 2025, for the start of submissions and July 15, 2025, for both regular and amended returns. Missing these deadlines could result in penalties and surcharges, while early submission offers the chance to benefit from various discounts and exemptions.