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Most Common Spanish Tax Penalties (Part 1)

Tax penalties

I think everyone, from the smallest self-employed worker to the largest companies, feels a certain unease when they receive a notification from the tax authorities. And the feeling of unease is not unfounded. A very high percentage (in our experience, we can say that over 90%) usually request information to correct incidents. 

The most common requests are those sent to you for not having submitted a statement or for having submitted it late. In today’s article, we explain how to calculate the sanction if the declaration you had to present was due.

If you have not filed the return, two things can happen: 

– you may find out before the tax authorities and decide to solve the mistake as soon as possible, 

– or you may not find out and receive a request. 

We will now explain the consequences of each situation by focusing on the returns with the amount to be paid. 

 

Before you receive a demand

You submit the declaration WITH the AMOUNT TO BE PAID out of time before the Treasury sends you the requirement.

That is the best situation for you! Instead of paying the penalty, you will pay a surcharge, the extemporaneous presentation surcharge.

In that case, you should act as follows:

1. You submit the declaration with the amount to be paid by making the corresponding payment.

2. You wait for the tax authorities to notify you of the amount of the surcharge. This amount usually comes with a 25% reduction. Then, you pay it in a voluntary period with the 25% reduction. If you miss the voluntary deadline for paying the surcharge, you cannot apply the reduction and will have to pay the full amount.

The surcharge depends on the time elapsed between the last day of the established period and the day of submission of your declaration.

SURCHARGES FOR EXTEMPORANEOUS PRESENTATION
Time elapsed between the last day of the deadline and the day of submission Percentage of Surcharge Delay Interest Sanction
3 Following Months 5% NO NO
between 3 and 6 Months 10% NO NO
between 6 and 12 Months 15% NO NO
more than 12 Months 20% YES* NO
25% REDUCTION There are two requisites:

  1. That you have paid the amount of the declaration at the time of filing.
  2. That you pay the notified surcharge during the voluntary period.

(*) The Tax Agency will charge you interest for late payment from the day after the 12-month period until the day on which you file the return.

 

After receiving a demand

You present the declaration WITH the AMOUNT TO BE PAID after having received the requirement from the Treasury… well, they have realized it! 🙁

If you forgot, you didn’t notice, and the Treasury Department did, once you received the request, it is best to file and pay the missing declaration.

At this point, the Tax Agency starts a sanctioning procedure for the commission of a tax infringement, specifically that regulated in art. 191 of the GLT: 

“Failure to pay within the period established in the regulations of each tax, all or part of the tax debt”.

This infringement carries a penalty of between 50% and 150% of the total debt. In the vast majority of cases, the infringements are classified as minor and the penalty consists of 50% of the amount not entered.

Furthermore, there are two cases you may reduce the sanction:

1. Reduction due to conformity. The sanction is reduced by 30% if you accept the sanction, not presenting an appeal or claim against it.

2. Reduction due to payment in due time. If you enter the sanction in the voluntary period, you can benefit from a 25% reduction.

 

Practical Example

You are obliged to submit the VAT form 303 for the first quarter of 2020, in which there was an amount payable of 398.54 euros. The deadline for the presentation had passed entirely. 

On 7 October of the same year, you receive a notification from the Inland Revenue requiring its presentation. On 11 October you present the declaration and pay the 398.54 euros. Later, on 4 November, you receive another notification with the calculation of the penalty and the period for payment.

CALCULATION OF THE SANCTION:

The basis on which the penalty is settled        € 398,54
Minimum percentage of penalty 50%
Resulting sanction € 199,27
30% reduction € 59,78
Difference € 139,49
25% reduction € 34,87
Reduced sanction € 104,62

 

As you can see, it is not very difficult to calculate the amount of the penalty. It is better to keep up to date with your tax forms and if you know that you have forgotten to submit one, don’t let more time go by and correct the mistake! 

 


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