Spain Tax Advisory: The effects of COVID-19 on the 2020 Personal Income Tax Return

The measures adopted by the Royal Decrees due to the pandemic will have their impact in the income tax return of the fiscal year of 2020

Following the great economic and social impact of COVID-19 at the national level, the Government has decided to impose a series of fiscal and tax measures to address the pandemic. However, these measures are expected to have an impact on personal income tax returns for the year 2020.

From B Law & Tax we analyse the possible consequences that the current health crisis may have on the income received by taxpayers during this year.

Firstly, the benefits received by TER´s will be affected in the following way:

  • These benefits will have to be taxed in the ITR as income from work. In addition, this procedure may affect the obligation to file the 2020 Personal Income Tax return, with the consequent reduction of the economic limit that determines the obligation to declare.
  • The amount received will be reduced to 14,000 Euros if more than 1,500 Euros have been collected from the second payer.
  • The benefits paid by SEPE hardly have any withholding, so that in all probability the result of the declaration would be to pay.
  • The worker can request an increase in the withholding rate either from his company if he has already re-joined his post, or from SEPE if he continues in the TER´s.

On the other hand, the extraordinary benefits for self-employed workers due to the cessation of their activity will have the same applications in the personal income tax as the unemployment collection. Therefore, such benefits will be taxed as income and they will be taxed as one more income from work.

Finally, the benefit derived from sick leave will no longer be paid by the company, but by the Social Security.

B Law & Tax

International Tax & Legal Advisors

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Tags: tax advisor madrid, Taxpayers, COVID-19, Tax measures, Tax returns, Spain Tax Advisory, ITR