The Tax Agency (“Agencia Tributaria” or “Hacienda”) in Spain can become a headache for the self-employed, companies, and individuals, especially if they have debts that they cannot pay. That awful feeling can’t be avoided when you know you have to answer for a payment. That’s why here we show you some strategies and tricks that will help you pay your tax debt in Spain, also, you can watch our tutorial video:
What unpaid debt in Spain can you have with the Tax Agency?
The main debts with the Tax Agency arise from:
- Non-payment of VAT: If you are self-employed or have a company, a miscalculation of quarterly or annual settlements can cause debts with the Tax Agency.
- Debt with Social Security: Debts can also be acquired due to an error in the payment of Social Security contributions or due to their omission.
- IRPF: if you have not made the income tax return correctly.
In addition, there are other Public Administrations that can claim certain payments from us, such as:
- Traffic fines from the Dirección General de Tráfico or from city councils.
- Municipal taxes such as the Property Tax, the mechanical traction tax, and garbage taxes. Non-payment of any of these concepts may also cause tax debt in Spain.
- Inheritance tax: In certain autonomous communities it is necessary to pay taxes when receiving an inheritance.
How to know if there is a debt with the Tax Agency?
If you think you may have an unpaid debt in Spain, you can check your tax situation via online if you have a Digital Certificate, Electronic DNI or if you are registered in the Cl@ve PIN System. On the other hand, you can also go to any office of the Tax Agency with a prior appointment.
5 Tricks to pay and get rid of tax debt in Spain
In Entre Trámites, we offer you 5 tricks that you must take into account when paying your debts with the Agencia Tributaria and free yourself from this situation:
1. Use debt compensation in Spain (if it is convenient for you)
If you have a tax debt in Spain with Hacienda and your tax return is returned to you, you can pay the full or partial balance of your debt with that money. This is done ex officio by Hacienda under the name of debt compensation.
You can request this debt compensation in Spain to make payments in cases such as quarterly VAT or Personal Income Tax (IRPF) with the return and payment of income tax.
Note: It is very important to evaluate the use of this measure. If your economic situation is complex, the money can be more useful for your solvency than leaving it in Hacienda.
A practical example to understand this type of case: If you owe €500 in IRPF, but the tax return gives you a result of €1,000 to be refunded to you, then Hacienda can subtract €500 from that tax return and leave the debt settled. However, if you prefer to have that money in your possession, you will have to ask them not to deduct it (remember that not paying the debts with the Tax Agency, generates late payment fines).
2. Request a debt deferment in Spain
If you do not have enough money or you cannot apply for debt compensation in Spain, you can request the Tax Agency to defer the debt. This is a legal process supervised by the Tax Agency, which is the entity in charge of contemplating and offering taxpayers this option. It should be added that late payment interest (5%) continues to be added during the stipulated term.
To request a debt deferment in Spain you must go to the Electronic Headquarters of the Agencia Tributaria and you will be able to suggest the terms that best adapt to your economic situation. For its part, the Tax Agency may reject or accept your proposal.
If they accept, the charges will be made to the bank account you indicated when you made your deferment request, from that moment you will have to comply with the agreement, otherwise the Tax Agency may cancel the deal and you will have to pay the full amount of the debt immediately.
What debts and taxes can be deferred?
Below we show you which debts may or may not be deferred:
Debts that cannot be deferred:
- Those of the withholder or the person obliged to make payments on account (Forms 111, 115, and 123).
- The installment payments on account of Corporate Tax (Form 202).
- Those derived from the execution of final rejection resolutions suspended during claims or appeals.
Debts that can be deferred:
- Installment payments of Personal Income Tax for businessmen or professionals in direct or objective estimation (Forms 130 and 131).
- Annual Personal Income Tax Return: The payment in two installments is allowed, the first one until June 30 and the second one until November 5. If this option is not sufficient, a deferment of the entire debt may be requested under the conditions established for any other tax.
- Annual Corporate Income Tax Return: Although the installment payments of this tax cannot be deferred, nothing is said about the annual settlement. Therefore, it is possible to request the deferral of the amount to be paid for Form 200.
3. Cancel your debts with the Tax Agency under the Second Chance Law
If you find yourself in a state of bankruptcy, you can take advantage of the Second Chance Law, which allows the taxpayer to declare themself insolvent and thus obtain the forgiveness of their debt with the Tax Agency, whether it is complete or partial.
4. Get a letter of payment
If you have the money to cancel the debt, you must obtain a letter of payment and settle the debt in a bank. This letter can be requested at a collection office or electronically from the Electronic Headquarters of the Agencia Tributaria website. This letter will serve you as a support and will give you peace of mind.
5. Apply for a loan from a bank and pay it in easy installments
If you have a debt with the Tax Agency and none of the options mentioned above work, you will have to resort to a bank loan, as long as the interests do not exceed those obtained in the debt with the Tax Agency.