Monday, February 15, 2021

Side effects of measures of the state of alarm in the statement of the income tax 2020

The measures adopted during the state of emergency – regarded to COVID-19 pandemic - have had repercussions in many areas ( health, economic, social , etc ... ) but we must be aware that also affects, in a relevant way, to the next statement of the income in 2020.

ERTE´s, sick leave and the need to declare

One of the consequences that will face the taxpayers can be found in the fact that many of them, who until now were not obliged to file the tax forms (because they have a single payer and do not exceed the limits set by the regulations), now they will be obliged to present the personal income tax form "as a result of the splitting of the payers that will have occurred in 2020" , mainly due to this possible situations:

-  Due they have been in a “Erte” (temporary labor force adjustment plan) - Because the benefit received by the SEPE is considered a performance work and is not exempt ... so " the SEPE" becomes a "second payer" of income from work (with the effects that we will detail later) .         

- Due the taxpayer has had a sick leave or other kind of sick benefits - In which case is the Social Security who pays part of the remuneration during the period of disability and also becomes a "second payer " of work income.         

It is not the subject of this article bogging economic limits, but we would emphasize the most relevant aspects  that can be derived from the “ERTE” and / or disability  situations:

  • In “a normal circumstances” a worker is not obliged to present an income statement due to his work if income does NOT exceed 22,000 euros and comes from a single payor or, coming from several payers, if the sum of income from the second and other payers does not exceeds 1,500 Euros.      
  • As we mentioned , the collection of income derived from a situation of “ERTE” or sick leave (it is a sickness or disability temporary) , implies that the SEPE or INSS appear as "new payers”, since yields paid are not exempt from income tax.      
  • Regarded to that , if the amount paid by the second and remaining payers exceeds 1,500 Euros, the limit to be compelled to declare the income tax is reduced up to 14,000 Euros ... and hence many taxpayers "fall" in the obligation to submit the declaration.      
  • But, it is because in most cases the SEPE has made a minimum retention regarded the retribution that this organism pays, which most likely is that, in addition to being required to submit the declaration, it will has a result to pay a considerable amount.      
  •  Likewise, and because it is considered that the worker is NOT “active”, we must bear in mind that the deduction for maternity / paternity will NOT be applicable to workers who were in “FULL ERTE”  - in the months in which this circumstance occurs - ( neither the deduction , nor the perception of the advanced payment) . Only workers with a partial ERTE of their working day will maintain the right to its application.     
      • Quote 1 - Those workers who continue in ERTE in 2021 and want to avoid “unpleasant scares”, can request the company or the SEPE to increase the rate of retention in the payment of “their part” of remuneration.
      • Quote 2 - We must be attentive to whether the “local governments” approve deductions that try to reduce these "negative collateral " effects (as Catalonia has done approving a new deduction in the personal income tax quota for workers affected by ERTEs or laid off in 2020 ).


Like the “ordinary” benefit, this extraordinary benefit for cessation of activity is a benefit of the unemployment protection system and has the qualification of performance of the work that is taxed in personal income tax and as such must be included in your personal income tax form.

Objective estimation regime ("Modulos")

As an exception to the general rule , it has been removed - for the year 2020 - the mandatory linkage of three years which sets the rules in case of waiver this regime; so that those who renounced its application in the payment of the first quarter of 2020, may reapply this regime if they have revoked the resignation during December 2020 or do it so by submitting the installment payment of Q1 of 2021.

Likewise, the DGT, in CV2500-20 , has indicated that , for the purposes of quantifying the "salaried personnel" module, " worker by worker " should be assessed ( depending on the conditions in which they are in ERTE ); computing exclusively the hours done and the effective work, and not counting the part of the contract work that is temporarily suspended .

Proporty leases

An last but not least, a few comments on "Real Estate", while not derived from a measure approved by the Executive, but regarded it’s an effect of the pandemic on the declaration of income tax:

  1. Regarding the leases that we must declare - Basically, the owners may face the following possible scenarios (as recognized by the DGT in its CV 0985-20 of April 21th) :
    1. Reduced rent agreed - The lessor must reflect as an income the new amounts agreed (the necessary expenses remain deductible for rent) and, although during part of the period a "total rebate is agreed regarded to the rent ”, NOT for that reason an imputation of income will proceed for the leased property.
    2. Moratorium on payments - The lessor should not reflect the income in wich months has been deferred the enforcement of payment. And as in the previous case, the expenses will continue to be deductible and the imputation of income will not be applied.
  2. The complaints of rent for the " second homes " - Despite restrictions resulting from the alarm status , must apply and hold to taxation as any other exercise the possession of a "second home" - because the charge is determined given by the ownership of the property and not for its "use" .

As usual we remain at your disposal to clarify or expand the content of this article.



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