Module 221 min2276 wordsFree — no account
Pension and self-employment credits, and the gross-tax ceiling
The module’s worked examples, then cases to attempt before revealing their solution · 4 sections · 386 words · 4 min
Worked example
Rosa's pension credit
Rosa's overall income is 20,000 euros, all of it pension received for the whole year. She is in the second band: the ratio is (28,000 − 20,000) / 19,500 = 0.410256…, truncated to 0.4102. Her credit is 700 + 1,255 × 0.4102 = 700 + 514.80 = 1,214.80 euros. No top-up, because her income does not exceed 25,000 euros.
Worked example
A pension that started in October
Mario's overall income is 6,000 euros, made up only of the pension he has received since 1 October, for 92 days. His yearly credit is 1,955 euros; scaled to days it becomes 1,955 × 92 / 365 = 492.77 euros. That is below the first-band floor, which lifts it to 713 euros. With a gross tax of 1,380 euros, 23 % of 6,000, his net tax falls to 667 euros.
Worked example
Luca, a graphic designer under the ordinary regime
Luca's overall income is 14,000 euros, all from self-employment. The second-band ratio is (28,000 − 14,000) / 22,500 = 0.622222…, truncated to 0.6222. His credit is 500 + 765 × 0.6222 = 500 + 475.98 = 975.98 euros; income lies between 11,000 and 17,000 euros, so 50 euros are added: 1,025.98 euros.
Practical case
Franco and his dependent wife
Franco is retired for the whole of 2026 and has an overall income of 9,000 euros, all from his pension, with no deductible charges. His wife, who has no income, is his dependant for the full year. He has no other credits. Compute his gross tax, his pension credit, his spouse credit, his net tax and any part of the credits that cannot be used.
Hint: Gross tax falls entirely in the first bracket, at 23 %. For the pension you are in the second band, for the spouse in the first: truncate both ratios at the fourth decimal place.
Show the solution
Gross tax: 9,000 × 23 % = 2,070 euros. Pension: ratio (28,000 − 9,000) / 19,500 = 0.974358…, truncated to 0.9743; credit 700 + 1,255 × 0.9743 = 700 + 1,222.75 = 1,922.75 euros. Spouse: ratio 9,000 / 15,000 = 0.6; credit 800 − 110 × 0.6 = 734 euros. Total credits: 2,656.75 euros, more than gross tax. Only 2,070 euros can be used: net tax is zero and 586.75 euros are lost.
Answer: Net tax of zero, with 586.75 euros of credits left unused
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