The best time is now: why you should not delay Income Tax planning

The Spanish Income Tax return (IRPF) is an unavoidable annual obligation for most taxpayers. Although the official filing period usually opens in spring, waiting until the last minute is a strategic mistake that severely limits your options for tax optimisation.

The best time to start working on your tax return is not April, but right now.

---

Planning vs. reacting: the key to optimisation

The fundamental difference between a good outcome and a poor one in your tax return lies in anticipation.

• When the filing deadline is approaching, you can only react to data that is already closed for the previous tax year.
• If you start planning in advance, you can still act in the present and shape your future tax bill.

---

Benefits of early tax planning

1. Identifying opportunities

Early tax analysis allows you to identify:

• Which allowances and deductions are available to you.
• How to make the most of them before the end of the calendar year (for example, by contributing to pension plans or using specific investment vehicles).

2. Making full use of deductions and incentives

Many regional and state deductions are conditional on:

• Having made certain payments or investments before 31 December.

Planning several months in advance ensures that you do not miss out on these opportunities due to lack of time or information.

3. Managing capital gains and losses

If you have realised gains or losses from the sale of assets (shares, funds, property, crypto, etc.):

• The current moment is ideal to offset them strategically.
• Proper planning allows you to carry out compensating transactions before the tax year closes, reducing the tax impact of your gains.

4. Estimating your tax bill

Preparing a preliminary estimate of your IRPF liability with the information available so far allows you to:

• Anticipate whether your return will result in tax payable or a refund.
• If a high payment is expected, you still have time to take action and try to reduce it.

---

Strategies to consider right now

Starting your planning today gives you the time you need to implement key tax saving decisions.

Contributions to pension and saving schemes

Contributions to:

• Pension plans
• Life insurance pension products or similar schemes

can directly reduce the general taxable base. This is one of the most powerful tools to bring down your final tax bill.

It is essential to know the maximum deductible limit in order to optimise this advantage.

Investing in start-ups and newly created companies

There are attractive state and regional deductions for:

• Investment in shares or units of newly created or recently created companies.

These incentives usually require:

• Time to formalise the investment.
• Compliance with specific conditions to be able to apply the deduction.

Main residence

If:

• You have carried out energy efficiency improvements in your main home, or
• You are still entitled to the old deduction for investment in main residence (for purchases prior to 2013),

an early review helps to ensure that:

• All formal and documentary requirements are met and the tax benefit is not lost.

---

Conclusion

The Income Tax return is not just an administrative formality. It is also a real opportunity for financial optimisation.

• Leaving everything to the last minute turns you into a passive observer of your own tax position.
• Acting in advance makes you the architect of your tax strategy.

The best time to start planning your next tax return is today.