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Quarantine for all except income tax

| COVID-19 / News | Tax

Tomás Rivero explains in Expanxión that the machinery of the Tax Agency related to the presentation of the different taxes corresponding to the State does not stop despite the extraordinary situation that we live due to COVID-19

Despite the exceptional situation we are experiencing due to the COVID 19, the machinery of the Tax Agency related to the presentation of the different taxes corresponding to the State does not stop, and it is at least surprising given the moment we are in and the incongruence that it may imply with the purpose of the measures adopted in recent days by the Government itself. Let us remember that these measures tend, on the one hand, to limit the mobility of the population in order to slow down the spread of the virus and, on the other hand, to reduce the economic impact that it will have on the Spanish economy. Thus, in the area of taxation, with the intention of achieving these goals, certain deadlines have been extended for the entry of debts settled by the Administration and deferrals granted and for certain tax procedures, also allowing the deferral under advantageous conditions for individuals or companies with a turnover in 2019 of less than 6 million euros of tax debts of less than 30,000 euros whose deadline for declaration and entry ends on 30 May inclusive.

Up to this point, everything is correct and consistent with the stated purpose: the aim is to inject liquidity (through "deferral" of payment) and reduce tax procedures, thus limiting the need for interaction between taxpayers, their advisors, managers and the Administration itself. However, after a few days of doubts as to whether the suspension measures affected the obligation to file self-assessments and the obligations relating to the Immediate Provision of Information on VAT essentially, it is reported that these are special procedures not affected by the suspension agreed by the Government, and a few days later it is announced that the Personal Income Tax campaign is maintained and begins in 10 days.

The Government has justified this last decision by the fact that most taxpayers file their returns via the Internet, thus avoiding movement, and that most of them are returning the money, so that this much-needed liquidity will be injected into the system. Both statements could at least be qualified, since although most of the returns are made by Internet, this does not imply that the taxpayer himself is the one who in his house (complying scrupulously with the confinement measures set by the Government) carries out the procedure without maintaining contact with anyone, but the reality is that this simplification is ignoring the role of the AEAT's social partners, the managers and advisors who prepare their clients' returns each year and who, with the maintenance of the income tax campaign on the calendar, will have to hold meetings with the disciplined taxpayers and socialize with them, despite the fact that such action is not advisable at the moment. To this must be added that there is a 12% of taxpayers according to the Treasury itself that presents its return in person, which taking into account that we are facing a tax with almost 20 million appeals to declare (statistics for 2017 from the AEAT itself), will make that in compliance with this duty, almost 2.5 million Spaniards are presented to the tax authorities for the submission of their corresponding declaration.

As for the second justification for the maintenance of the campaign, although it is true that there are almost 14 million taxpayers with results to be returned compared to the 5 million taxpayers with results to be paid, it is not less than the result of compensating some and other amounts is favourable to the Treasury, that is, more will be paid than will be returned, also coinciding that most of these amounts to be paid will affect individuals entrepreneurs, the self-employed, many of whom will have had to close their businesses during the quarantine without the possibility of generating income, but will have to present their corresponding income tax return and pay what is due, and without the possibility of deferring it under the advantageous conditions approved by the Government, since these conditions apply to those debts for which the return deadline is 30 May, when it is known by all that the income tax return deadline is one month later.

Some people may wonder what could have been done, and the answer is to be found in our own country: Álava has modified the deadline for filing personal income tax returns (remember that in this case it is responsible for this tax), extending it to September under certain circumstances, and has also delayed payment by taxpayers until November. Once again, differences are generated between taxpayers according to their place of residence.  

You can read the article in Expansión.

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