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The coronavirus will take its toll on the income tax of those affected by furloughs

| News | Tax

Miguel Ángel Galán explains what workers affected by furlough scheme stemming from the coronavirus should consider when preparing next year's tax return in Las Provincias

A shock is coming in next year's tax return for the more than 400,000 workers who have been affected by the Temporary Regulation of Employment (ERTE) in the Valencian Community stemming from the coronavirus.

As Miguel Ángel Galán, Andersen Tax & Legal partner explains, "the SEPE (Public State Employment Office) generally does not keep anything back or if it does then only the minimum, so when all the income is accumulated, it is possible that the withholding rate will not have been applied”.

This situation, frequent when changing jobs in the middle of the year, in this case implies "a perverse effect, that people with a low level of pay and who until now were not obliged to do the declaration", will have to pay.

That is why Andersen Tax & Legal advises "to be careful and keep the money that is being advanced", by not retaining the corresponding amount, and then claim in the income.

Another of the consequences of the COVID-19 on income tax is the deduction for maternity for workers with children under three years of age, of up to 1,200 euros per year and with the possibility of requesting a payment of one hundred euros per month. 

If an ERTE is applied to them and the employment contract is suspended for one month, "they lose the right to receive the 100 euros or request the deduction in tax for the duration of the furlough", as they become totally unemployed and no longer meet the requirement of being registered with the Social Security. According to Galán, in the case of reduction of working hours, they would be entitled to the deduction for maternity.

As for the possible benefits, he stresses that the suspension of deadlines due to the state of alert may benefit those who sold their homes and had years to reinvest all or part of the proceeds in the purchase of a permanent home to avoid paying capital gains. 

In view of the foreseeable drop in prices, when the calculation of those two years from the sale is resumed "perhaps you will have the opportunity to reinvest in a property at a sensible or notably more advantageous price and, with the same money, you can now buy a better home".

The possibility of rescuing the equivalent of what has been lost to the pandemic from pension plans and similar instruments are among the measures to alleviate the hardships faced by households in the wake of COVID-19

According to Miguel Angel Galan, of Andersen Tax & Legal, workers made unemployed as a result of an ERTE stemming from the coronavirus, employers forced to close their businesses by the declaration of the state of alert, such as bars or restaurants, and self-employed who have ceased their activity by this situation can apply for reimbursement.

You can read the full article in LAS PROVINCIAS.

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