The nearly four million workers affected by a Record of Temporary Employment Regulation (ERTE) due to Covid-19 could get a scare next year when they file their income tax returns. The reason is that, for tax purposes, they will have two payers in the 2020 income tax campaign, with the practical consequences this usually has. The first problem is that they will probably have to file the return, even if their income does not exceed the legal limit; the second is that they will probably have to pay. Experts warn about this issue, which may have gone unnoticed by many workers who have been forced into an ERTE.

Unemployment benefit is, like payroll, an income from work performance, and Social Security is considered a payer for tax purposes. The same rule applies to the benefits received by workers in ERTE. As confirmed by Miguel Ángel Galán, Andersen Tax & Legal Partner, "if the SEPE or any other public body pays us any remuneration, it is considered to be a payer for personal income tax purposes".

One of the most common problems of having two or more payers during the year is that the result of the income tax return will show positive numbers. This is quite frequent in cases of receiving salary and unemployment benefit or other types during the same tax period. "You have to look at the specific case, but yes, you might have to pay", predicts Galán regarding the workers in ERTE.

However, Galán points out, one must not lose sight of the fact that, in the end, the same taxes are paid for the same income. It is, he explains, "a question of liquidity and financial effect," what in tax law and economics is known as the theory of financial illusion.

You can read the full article in El País.