The Spanish government recently unveiled a new set of measures designed to help self-employed individuals and SMEs. The package offers tax relief and lightens the financial burden during the pandemic. In this article, we outline the latest tax relief for self-employed and SMEs in Spain as well as other important measures.
Tax Payments Postponed
Both self-employed individuals and SMEs benefit from the postponement of tax payments for the first quarter of 2021. Payment of tax due in April for Q1 can be delayed for a maximum of six months. In practice, this means that your tax due can be paid in October.
- The first 3 months of postponement (ie until June) are interest-free.
- The second 3 months (ie until October) are liable for interest.
- You can postpone payment of up to €30,000.
Reduction of Modular Tax Payments
If you’re self-employed or run a SME in Spain that pays tax through the modular system (régimen de módulos in Spanish) you are entitled to reductions in the amount of tax you must pay as follows:
- 5% reduction in tax payments due for Q1 this year.
- 20% generally in tax payments due for 2020.
- Up to 35% reduction if your business is in one of the particularly hard-hit sectors (hotels, restaurants, tourism and retail) in tax payments due for 2020.
Note that this also applies to the annual amount of VAT (IVA) payable in 2020 and when calculating the first VAT payment in 2021.
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Switch From Objective to Direct
The new package of measures to help self-employed and SMEs in Spain also includes the opportunity to change your tax regime. If you are currently using the estimación objetiva (objective estimate), you may change to estimación directa (direct estimate).
If you change, you are not obliged to stay in the estimación objetiva system for the usual three years. You can find out more about this measure here.
State of Alarm Not Computable
If your business forms part of the the estimación objetiva system and/or you use the régimen simplificada for VAT, take note of the following for income in 2020:
- You do not count the days during the national state of alarm (March 14th to June 21st).
- You do not count the days when your business was closed because of regional restrictions during the second half of 2020. Note that these do not count in your tax declaration for Q4 2020 either.
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Rental Relief for Tenants and Landlords
The Spanish government has also included rentals for business premises in the new measures. Under them, landlords who apply discounts on monthly rentals or agree to give tenants free rental for a period of time benefit in their tax calculations.
Discount on rental – the difference between the usual rental and the reduced rental is a deductible expense. For example, if the rent for the business premises usually costs €900, but the landlord agrees to charge only €600, the €300 difference counts as an expense for the landlord.
Free rental – if a landlord agrees to let a tenant off paying rental for the premises for a period of time, the lost revenue becomes a deductible expense for tax purposes. So, for example, if a landlord usually charges €1,000 for the monthly rental, but agrees to give the tenant a month free, the €1,000 count towards deductible expenses.
The final measure benefits workers and businesses in the food and beverage sector. Lunch vouchers are now available to employees working from home as a result of the pandemic. They can use them to order food by home delivery at lunch time.
Make sure you and your business get the most from the new measures by using a professional tax advisor. The Costaluz Lawyers expert team are on hand to answer all your tax questions and assist you in your fiscal obligations in Spain. Get in touch now to find out how we can help you and your business.