When computing as work performance, the first 2,000 euros of the extraordinary benefit for cessation of activity are exempt
The havoc caused by the pandemic on the economy has also had serious repercussions among self-employed workers, a group that fell by 10% in the first nine months of last year. As of October 1, 2020, there were 2,670,000 self-employed workers left in Spain, according to an INE report published last month.
With the aim of alleviating the consequences that the coronavirus containment measures adopted during the health emergency had on this group, the Government implemented a series of aid. In the case of having received them last year - other subsidies have been approved this month - the benefits must be reflected in the income tax return, the campaign for which begins on April 7.
Perhaps one of the best-known aids that were put in place so that the self-employed could face the crisis is the extraordinary benefit for cessation of activity. Like the usual benefit, this subsidy is part of the unemployment protection system and, as such, must be taxed as work income. “Although its origin is in the activity of the self-employed worker, it is not an income inherent to it and therefore it is not classified as a return from economic activities,” they explain from Gestha, the organization of Treasury technicians.
This means that the taxpayer will be able to benefit from tax reductions on earned income, so the first 2,000 euros of the benefit will be exempt from taxes, as long as they do not have other earned income. In the case of receiving aid less than this amount, the fintech TaxScouts highlights the obligation to continue imputing the income in personal income tax even if it is not paid for them. “It must also be remembered that self-employed workers who have ceased activity, even if they have no income or expenses other than the benefit itself, continue to be obliged to present the quarterly VAT and Personal Income Tax models,” they emphasize.
On the contrary, if they have been able to benefit from an ICO credit, as this is aid that must be repaid, the self-employed worker should not count it in their declaration as income from work. However, "the interest borne by the businessman can be deducted as expenses, as well as the rest of the expenses of opening and establishing the credit that have been applied," TaxScouts highlights. And they remember that, "in the event that the self-employed person has been able to take advantage of the extension of the waiting period for the loans, so that they have not had to pay the principal of the installment, but they did have to pay the interest, they could also deduct these as bills".
Reduced activity performance
There are also subsidies granted by the autonomous communities. These are taxed as income from economic activities, as long as their exemption has not been expressly established. On the contrary, benefits compatible with the activity must be included in the income from work (that is, those intended for self-employed workers who have not been able to recover the income they had before the pandemic or whose situation has worsened in recent months), extraordinary aid for low income and aid for seasonal self-employed workers, available for workers who had to be registered in that regime for a minimum of two months between 2018 and 2019.
“As with any other source of income, not declaring aid received due to the coronavirus crisis may imply a penalty that varies depending on the severity of the infraction,” warn TaxScouts. The penalty will be light when the undeclared amount does not exceed 3,000 euros, whether concealment exists or not; serious if the undeclared amount is greater than 3,000 euros and there is concealment; and very serious, when fraudulent means are used.
The Treasury technicians also point out that several regulatory modifications have been carried out with the aim of taking into account the decrease in income caused by the pandemic and that has affected entrepreneurs who are in the objective estimation system or by modules (that is that is, tax management that is based on the calculation of profits according to certain indicators and not on the detail of accounting).
In this way, the reduction in the net performance of the activity in 2020 goes from 5% to 20%, in general, and to 30% in the tourism, hospitality and commerce sectors. For the calculation of the annual performance, the days of inactivity in which the state of alarm was declared in the first semester of last year are not counted, nor the days of the second semester in which economic activity had been suspended due to the measures adopted by the autonomous communities. In addition, the waiver is allowed for only one year, instead of three, of the objective estimation method by modules in personal income tax, the simplified regime and the special VAT regime for agriculture, livestock and fishing in 2020, as will allow in 2021.
Source: ElPais
English 
Spanish