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Tax Obligations In Spain Without Income

Tax Agency (Hacienda)

Tax Obligations In Spain Without Income

Did you know you have tax obligations in Spain, even without income or expenses? The VAT declaration is one of the primary tax obligations of a self-employed person. 

Although it may seem that if you have no income and no expenses, it is not necessary to present anything to the Tax Agency, that’s not true

The Treasury requires you to present the quarterly VAT settlement, whether or not you have income. 

Form 303 will be different in cases where you have no expenses or income and where there are invoices to deduct. 

We will see how to proceed to declare VAT for a self-employed person with no income. 

Quarterly VAT if you have no income or expenses

There may be times when you maintain your registration status with the Tax Agency and Social Security, but you haven’t got income or expenses. That may occur, for example, at the beginning of a service provision activity for which you don’t need to contract suppliers or purchase material.

What do you declare in form 303 in this case?

The Tax Agency establishes that it is mandatory to present the liquidation in any case, including when there is no income or expenses. Yes, it is effortless to do it, but you have to do it!

When you have to present form 303 without input and output VAT, you only have to check the box that indicates “without activity” at the end of the form. By marking it, you are indicating to the Treasury that there is no movement in the business or professional activity in the period to which the declaration refers. 

You must also include that situation in the annual VAT summary (form 390) at the time of filing. 

Quarterly VAT if you have no income, but you do have expenses

If the situation arises in which you have no income because you haven’t issued invoices to clients, but you do have deductible invoices from suppliers, everything changes. That may occur when you haven’t had sales, but it is necessary to continue paying some expenses for contracted services, such as electricity or internet. 

What do you declare in form 303 in this case?

In this case, as in the previous one, it is also mandatory to present the liquidation. Also, you will not have to check the “no activity” box since you have registered movements. 

It will be necessary to indicate the operations of expenses with deductible VAT in form 303, and the result you will obtain will be negative

You can request a refund of input VAT or compensate with subsequent quarters whose result is positive. If you choose the return, you can only request it in the last fourth quarter of the year. 

What if you have no income for several quarters?

The situation in which a self-employed person does not generate income must be something punctual in a quarter, and this is how the Tax Agency understands it. Sometimes, you cannot provide the services or sell the products. In that case, the withdrawal of self-employment is usually processed until the activity resumes. 

Be careful because if you are enjoying the Flat Rate or other assistance in the self-employment fee, you may lose this reduction when you sign up again.

If you have several quarters without income and your registration status in the Treasury remains, the alarms may go off. 

When the Tax Agency detects a lack of correlation between income and expenses, they may request an inspection or, at least, a tax check. 

The process will end without further ado if everything is correct and the situation is justified. 

Penalties for not submitting the quarterly VAT

We have seen that submitting the quarterly VAT settlement is mandatory, even with no income or expenses. 

The Treasury may sanction you if you do not comply with this obligation correctly. The possible scenarios are as follows: 

  • A fixed penalty of 100 euros if you quickly correct the error for not submitting form 303 correctly within the indicated period. 
  • Up to 300 euros if you receive a request from the Tax Agency to correct the error. You can reduce the penalty by 25% if you pay it in the voluntary payment period indicated in the requirement. That is, the total to pay would be 225 euros. 

For all these reasons, it is best to present the quarterly VAT return yes or yes. If you do not do it due to an oversight or mistake, it is best to submit it after the deadline but before receiving the request from the Treasury. 

The quarterly VAT is an obligation that any businessperson or professional has, even if they did not have income in the quarter to which it belongs

Form 303 must be presented without activity if you do not have expenses. Now, if you have a supplier or deductible invoices, you will include them, and the declaration will have a negative result. Otherwise, you will face fines of up to 300 euros.

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