Calculating Tax Percentages

When the taxable base has been calculated, the system subtracts the employee's annual social security contribution if the employee is associated with the state territory.

The system estimates social security contributions as two segments: the actual social security contributions year-to-date and the estimated value for the rest of the year. The amount remaining after subtracting the annual social security contribution from the estimated tax base is the Rendimiento neto del trabajo (RNT). To calculate RNT, the system uses the social security contribution accumulator (TAX AC SS CT A) for the actual year-to-date contribution and estimates future contributions. These calculations are made in the formula TAX FM CT SS EST. After the system deducts social security contributions, it applies a second reduction for irregular income to determine RNT.

RNT is subject to deductions for salary level, disability, personal minimum deductions, family minimum deductions (dependents), alimony, and irregular income.

For employees associated with the state territory, the third step in the IRPF calculation is the calculation of deductions.

The system calculates the ART18 reduction, the personal minimum reduction, and the familiar minimum reduction.

The ART18 reduction is based on income level, disability, geographical mobility, and worklife extension. The system compares both values to ranges in the system to determine the reduction amounts using the formula TAX FM RD ART 18.

The personal minimum reduction is based on age and disability. The system compares both values to values in the system to determine the reduction amounts using the formula TAX FM RD MN PERS.

The familiar minimum reduction is based on dependents, both children and adults. The system considers the total number of dependents, their ages, their degree of disability, and their level of dependency on the employee. The system calculates these deductions using the formula TAX FM RD MN FAML. The system uses the formula TAX FM FAM NUM to calculate the reduction when a payee has more than two descendants.

The system also calculates a reduction for spouse support garnishments using the array TAX AR RET JUDIC.

Once the system has calculated the taxable net base and the personal and familiar minimum reductions, it calculates the withholding percentage. The system employs different formulas, depending on the fiscal territory:

• For the state territory, the system uses the TAX FM CT IRPF EE formula to compare the taxable net base with the income ceilings defined on the Tax Ceiling page and generate the total contribution amount.

  The system calculates the contribution using two factors: Quota 1 and Quota 2. Quota 1 is the result of applying a bracket to the total taxable base. Quota 2 is the result of applying the bracket to the personal and familiar minimum reductions. The total contribution quota = Quota 1 − Quota 2.

  For payees paying alimony for child support the system uses a special calculation for the total contribution quota.

  See Calculating Garnishment Taxation.

  After the system calculates the total contribution quota, it determines the withholding percentage using the formula TAX FM PCT IRPF EE. The system applies the active reductions to the contribution and divides that value by the total taxable income to determine the withholding percentage. There are certain limits on the final percentage in the absence of regularization. When you do run the regularization process, the system uses the formula TAX FM REGULARZN to comply with legal requirements.

• For historical territories, the system uses the formula TAX FM HT PCT EE to calculate the Withholding percentage. The formula compares the taxable net base with the Withholding Brackets for the historical territory. For disabled payees, the system adjusts the percentage by subtracting the Disability Bracket percentage from the Withholding Bracket percentage.

PeopleSoft Global Payroll for Spain delivers and maintains tax brackets. You can view and update tax brackets using the Withholding Segments page.

Payees can increase their percentage using the Tax Percentage Override page. However, if the override is lower than the calculated percentage, the system uses the higher amount. You cannot use the Override Tax Percentage ESP page to reduce the tax percentage.

For the state territory, two garnishment types are available that affect tax calculations: child support and spousal support. For the historical territories, the only garnishment that affects tax calculation is the spouse support garnishment.

If a payee has a child support garnishment, the system estimates the annual value for this garnishment (or estimates the value for the remainder of the contract). Then, the system calculates separate contribution amounts for the garnishment and for the remainder of the taxable net base. Like the calculation used for standard state territory withholding, the calculation for payees with child support garnishments is Quota 1 − Quota 2. In the case of garnishment taxation, however, Quota 1 = Quota 1.1 + Quota 1.2 where Quota 1.1 is the result of a bracket applied to the garnishment amount and Quota 1.2 is the result of the bracket applied to the taxable net base.

For example, assume a taxable net base of 22.625,19 EUR and an estimated annual garnishment amount of 2.704,55 EUR. The bracket calculations would be applied to 2.704,55 EUR and 22.625,19 EUR separately generating two contribution amounts, TAX VR CT1 IRPF (Quota 1.1) and TAX VR CT2 IRPF (Quota 1.2). The system then combines these amounts into TAX VR CT IRPF (Quota 1), which is used to calculate the tax percentage.

In addition, when calculating Quota 2 by applying the brackets to the personal and familiar minimum reductions, the system adds a fixed statutory amount.

For the state territory, the system subtracts the spouse support garnishment annual estimation from TAX VR RNT as a special reduction.

See Estimating the Social Security Contribution.

For the historical territories, the system subtracts the spouse support garnishment from the annual income to calculate the taxable base.