2020 was one of the most difficult years for the Spanish economy, and especially for self-employed people: the self-employed.
In fact, according to data from the National Statistical Institute (INE) in early 2021, 10% of Spanish self-employed people ceased their activity between January and October last year.
To alleviate this problem, the Spanish Government launched a number of aid for self-employed persons such as the deferment of taxation or the extraordinary cessation of activity benefit,among others.
The question many are now asking is: how should these aids be indicated in the 2020 Income Statement? Our team of
gives you the answer below.
Taxation of COVID-19 aid
The Directorate-General for Taxation (DGT) has discussed in a number of consultations different aspects related to the taxation of these aids which, in the context of the COVID-19 pandemic, have been able to receive the self-employed on the occasion of the suspension, cessation of activity or fall of your income.
IrPF 2020 cessation of activity benefit
Below, we summarize for your interest cv V0071-21 of January 22, 2021.
A taxpayer who has received the extraordinary cessation of activity benefit asks the DGT whether that benefit, for the purposes of the IRPF, has a nature of return on work or economic activity.
DR-Law 8/2020 (Art.17), extraordinary urgent measures to address the economic and social impact of COVID-19,established this assistance for professionals included in the Special Regime of Self-Employed or Self-Employed Workers or in the Special Regime of Sea Workers, 70% of the regulatory base,or the minimum contribution base where the minimum contribution period for entitlement to the benefit is not established.
The DGT ruled that the extraordinary cessation of business benefit is an extraordinary social security benefit for self-employed workers, the nature of which is analogous to economic benefit by total, temporary or definitive cessation of activity (RD-Law 8/2015 Title V).
These benefits include, among the full performance of the work, unemployment benefits, understood in a broad and not only comprehensive way of the situation of cessation of activity for employed persons [Art.17.1.b) of the IRPF Act (35/2006)].
Therefore, and according to the foregoing, the DGT concludes that the extraordinary cessation of business benefit is of the nature of the performance of the work.
It must the thus be included in the declaration in the section on income from work and may benefit from tax reductions in labour income. In addition, the first 2,000 euros that the taxpayer has received will not be subject to withholding, so they will be exempt from taxes.
Self-employed persons who were trading on the minimum basis (remember that by 2020 it was EUR 944.44 per month) and have only received for two months the cessation of business benefit will not be taxed for this benefit, as they would have charged less than EUR 2,000. That income must be included in the IRPF but will not be paid for.
In addition, the taxpayer also raises in this same consultation what impact the exemption from the obligation to pay the fees to the Special Regime of Self-Employed or Self-Employed Persons (RETA), which also entails the collection of such benefit, may have on the tax.
On this issue, the management centre understands that DR Leg 8/2015’s configuration of the total or partial exclusion from the payment of RETA fees as a result of a lack of obligation or exemption determines its lack of impact on the IRPF,as it does not correspond to any of the income claims established in the tax regulations (LIRPF art.6).
Therefore, it does not have the full nature of return or, nor, nor, the cost deductible for the determination of yields.
Aid and grants granted by autonomous communities and ICO credits
Another binding consultation that is of interest to its significance in this area is the V0105-21, of 28 January.
It discusses how a subsidy granted byan autonomous community for self-employed persons in difficulty should be taxed, including, inter alia, the suspension of activity or the fall in income as a result of the pandemic.
In accordance with Article 27.1 of Law 35/2006, the DGT concludes that such income deserves the qualification of income from economic activities in the field of personal income tax, and must be allocated in accordance with Article 14(1.b) of that legal text. However, if indicated, the aid could be exempt from taxation.
Therefore, activity-compatible benefits, extraordinary low-income aidand support to seasonal self-employed persons should therefore be included. If you do not, a tax violation may be incurred.
As regards the temporary allocation of these aids, if they are applied to offset expenditure for the financial year or the loss of income they will be treated for current subsidies, i.e. income for the year in which they are received.
With regard to
like any other loan that the self-employed may receive, is not linked to any tax, as it is not considered an income as such.
Contributory benefits or unemployment benefit
It should also be recalled that, for the purposes of the IRPF, unemployment benefits provided by the State Public Employment Service (SEPE),whether contributory benefit or unemployment benefit, are not exempt.
Nor are public financial aid to unemployed persons in the Prepare Plan (DGT CV 17-9-13), which must be integrated into the declaration as the work performance of their dealer,subject to retention.
On the other hand, unemployment benefits in the single payment method are exempt, including subsidies consisting of the payment of 100% of the worker’s contribution to contributionsunder the corresponding Social Security scheme.
As a novelty for this year in the 2020 Income Declaration, in the section on income from economic activities in direct estimation, on a voluntary basis it is allowed for the first time taxpayers can transfer the amounts entered in the books register of the Income Tax of Natural Persons, in aggregated form, to the corresponding boxes of this section of the model.
If your company has obtained these benefits, remember to follow these guidelines for taxing business support by COVID-19 in IRPF 2020.
At AYCE Laborytax you have a large team of tax professionals who will know how to help you in your Income Statement.