“When the withholding had not been made or had been for an amount less than due, due to causes attributable exclusively to the withholding agent or forced to enter on account, the recipient will deduct from the fee the amount that should have been withheld.”
This section of article 99 of the personal income tax law opens the door for taxpayers with a payer, without other income and who have had their rent payable to have that amount deducted and that their tax bill remains zero.
“Every year they pay me 300 euros and I only collect from the company…” laments Elvira, a fictitious name for a real case. Since she only has one payer, with the regulation in hand, she could retouch the withholdings that have been made in her statement so that the mismatch does not fall on her. In other words, that a possible error in the withholdings made by the company does not weigh on the taxpayer.
But activating it can turn against it, since it leads to a verification and liquidation of the Tax Agency with the company, which can end up demanding from the worker what the Treasury requires. So, is it worth trying?
“It is not done frequently, especially if we will continue working in the same company. If you apply the deduction later they can claim it and it would not be so interesting,” says Antonio Paredes, a tax expert from Gestha, a union of Treasury technicians.
Going back to Elvira’s example, if you know that the rent is payable and you want to apply the deduction and save the invoice with the Tax Agency, in the draft of the income statement in the section “Earnings from work” you should touch the box “Monetary compensation” [0003], which has a modifiable “Retention” option.
To know what figure to put, the corresponding withholdings must be calculated, something that can be done in two ways. The first is simpler: make the feint of presenting the draft so that the result of the declaration appears. Based on the data that appears as a result, the “Liquid quota resulting from the self-assessment” should be included, what has to be paid for our income, and the “Withholdings and other payments on account”, which is what has been withheld indeed by the company.
For example, Elvira would see that her liquid quota is 8,500 euros and the withholdings are 8,200 euros. Hence, she goes out to pay 300 euros to match them. If she copies the first figure in the box [0003] that was written down before, the rent will remain at 0 if she does not have remuneration in kind.
The second option to know the corresponding withholdings is calculating them with the 2022 personal income tax calculator from the Tax Agency. Again, by substituting the figure that comes from the series in the declaration, the result would have to go from paying to 0.
In both cases, when a satisfactory result is obtained, self-assessment can be presented.
So far painless. Because taking the step and retouching the withholdings by hand activates verification mechanisms with the worker and the company, with potential sanctions for the latter that can nullify any savings. “By doing so, the data that we have entered will automatically be crossed with the amounts withheld by the payer. If the amounts are lower, it is normal for the worker to be required to provide their annual withholding certificate. If the Tax Agency verifies that they should have been so, higher, it will admit the change but it will claim the outstanding withholdings from the company and it will liquidate them”, explains Paredes.
And it is that the 300 euros that appeared to Elvira in her statement do not vanish, someone has to pay them. Sources from the Tax Agency reiterate that a check would first be made with the citizen to contrast with her summary of withholdings. Then it would be checked with the retainer, the company. If the fault lies with the company, the Tax Agency can liquidate the withholdings not made with a penalty and interest from the moment they should have been made.
Can the company pass it on to the worker? You cannot request a refund through the tax channel (resolution of the General Directorate of Taxes V0543-21) but you can through the civil one if you consider that you have suffered damage. “The company that has not made the withholdings in a timely manner is going to be penalized, it is going to have to enter them and by civil means it can request a refund from the worker. It can claim that it made us an extra payment, that it paid us more by payroll. Generally it does not compensate”, sums up José Pedreira, coordinator of the Group of Experts on Personal Income Tax of the Spanish Association of Tax Advisors (Aedaf).
“By ordinary civil procedure, he will try to collect those amounts from the worker. He has entered them and should have withheld them,” Paredes abounds.
Seeing what you can assume, there is an intermediate way out. It is necessary to make sure that the withholding is poorly done and that there have not been assumptions such as a salary or contract change -a low withholding due to an initial internship contract and then the one that would affect the professional category if it remains fixed- that disrupt the final tax bill.
“If you have been withheld less, you can tweak the statement and not pay the difference, but first you would have to be prudent,” says Benjamà Anglés, an expert in Tax Law at the Universitat Oberta de Catalunya (UOC). If the rent is to be paid with a payer and without further complications in the tax calculation, “as a worker, I would make a statement to the company requesting in writing that it calculate the withholding correctly, to see if there is an anomaly. Give the opportunity for it to be explained or rectify”. It may be that the company does not have updated information on our marital situation or children and that the withholdings are not being relevant. “It could be the fault of the worker or the company,” says Anglés. When you are sure that the error is from the company, you can negotiate or claim.
Taking the scenarios and possibilities into account, taking advantage of legal support can be more useful in situations in which it is known that the company will not end up claiming, such as those in bankruptcy, or if the worker owes amounts.
Deducting with a payer “was done long before, 15 or 20 years ago, not anymore… Now it is difficult for there to be mistakes in withholdings, there are computer programs that calculate it,” explains Carmen Jover, president of the tax commission of the Col·legi d’Economistes de Catalunya and vice-president of the REAF-CGE. Jover sees the imbalances that they make pay in the declaration with a single payer more attributable to another factor. She focuses on the small mismatch between the withholding scales of work income – with which the company calculates how much it must withhold – and the scale of regional taxation. For example, the withholding has six sections and the Catalan scale thirteen, with particular divisions for both low and high income.
This can produce results to pay when adjusting and liquidating the IRPF in the income statement. “Withholding is the same for anyone who lives in Spain and has a salary. But taxation is half decided by the State and half by your autonomy. For example, they can retain you the same as a person from Madrid, who can then have a lower tax than in Catalonia”, says Jover. “There is a real gap between withholding and taxation, if it goes out to pay it is not necessarily that the company is doing me wrong withholding,” he adds. This explains why in Catalonia there are more declarations to be paid. Thus, the fact of paying is not necessarily an error that comes from the company.
It may also be that withholdings are made at a fixed rate and then the final taxation is higher.
In short, first you have to study the case something and assess what may be causing you to have to pay, before applying the law assuming that it is a company error.
With everything, you can look for a positive vision to pay to the Treasury… “If it goes to pay, it means that you have enjoyed money that should have gone to taxes. The ideal would be a 0 result,” says Anglés. “Paying in rent is more of a psychological effect than something practical. If they withhold less from you, it means that you are enjoying that money throughout the year,” says Paredes.
