Page 1 of 1

Direct vs. indirect taxes: What is the difference?

Posted: Sat Dec 21, 2024 3:38 am
by jrinea.k.te.r0.1
There are only two certainties in life: death and paying taxes, said Benjamin Franklin. But it is one thing to pay taxes, and another thing to have so many taxes, direct or indirect, that it takes years of study to understand them.

We explain what direct and indirect taxes are and what the main taxes of each type are.
Learn the differences between direct and indirect taxes.
Spaniards spend around 40% of their salary on taxes. We pay taxes all the time, from when we turn on the light to when we turn on the water tap.


Direct taxes vs indirect taxes
Direct taxation is more visible, and no one can ignore the fact that they have to file their tax return . But indirect taxation is like an invisible tax that we pay every time we buy fiji email list something subject to VAT, or enjoy basic services such as electricity and water. So, when we pay these bills, we also pay taxes.

Even for some products, several types of taxes are paid. This is the case, for example, with alcohol, tobacco and fuel, which, in addition to VAT, are also subject to excise duties . These taxes are applied as a fixed amount or a percentage of the price at the production stage of the product. An extra cost for the product that is ultimately paid by the final consumer.

As if state taxes were not enough , there are also regional and municipal taxes. Taxes are paid on everything except breathing. Although since masks are mandatory for breathing outside the home, this has already been solved. When we buy masks, we also pay VAT.

Image


There are so many and ever-changing tax laws that knowledge of taxes requires constant updating. Every so often, new tax figures emerge, such as the new Google tax .

There are various classifications that can be made of taxes, but the best known and most used is the one that distinguishes between direct taxes and indirect taxes .

Direct taxes
Direct taxes are those applied to a direct or immediate manifestation of economic capacity . For example, the possession of assets and/or the obtaining of income.

Among the direct taxes, there are some of the best known, and the following can be highlighted:

Personal Income Tax
It is regulated by Law 35/2006 of 28 November and by Royal Decree 439/2007 of 30 March. This tax is levied on all income from work and capital obtained in a fiscal year, being one of the main forms of direct taxation of employees and self-employed workers. It particularly seeks to apply the principles of economic capacity, equity, justice and wealth redistribution.

Non-Resident Income Tax
It is regulated by Royal Legislative Decree 5/2004, of March 5, and by Royal Decree 1776/2004, of July 30. This tax is levied on income obtained in Spain by persons who do not reside in Spain .