Self-employed: news on VAT and personal income tax

Self-employed: news on VAT and personal income tax

We are starting the year 2020 with a number of important developments for all taxpayers, including the self-employed. These measures affect important tax documents such as VAT and income tax returns. We analyse how they affect you.

The Official State Gazette published the Resolution of 21 January 2020, from the General Directorate of the State Tax Administration Agency, approving the general guidelines of the 2020 Annual Tax and Customs Control Plan. In addition, following the formation of the new Executive, there are a number of fiscal developments that have been recently approved.

The main measures that will come into force as of this year refer to two of the most relevant declarations: VAT and personal income tax. On the one hand, the self-employed will have the opportunity to use a help service to complete form 303. In addition, the Tax Agency has announced that the Income Tax Return 2019, which will be made between May and June 2020, will require much more detailed information on the properties, rents and business activities of taxpayers. For example, the self-employed will have to complete a more extensive breakdown of deductible income and expenses.

Pre303 model: the great novelty in the presentation of VAT

The Tax Agency intends to make progress in making tax data available to the taxpayer also for VAT, specifically in the case of the PRE303.

This is a service to help fill out form 303, which will be available for the self-assessment presented in February, the one corresponding to January. In essence, what you should know about this service consists of the following

The Pre303 service is a pilot for this year. This means that it can only be accessed through the so-called “Added Books” or LLAA, which make up a group of the amounts consigned in the VAT register books kept through the Electronic Headquarters of the AEAT. Thanks to the LLAA, the taxpayer can transfer this information to the boxes in the “Settlement” section of said form, and also modify it before it is submitted.
The PRE303 will be offered to certain taxpayers included in the Immediate Provision of Information (SII). The AEAT specifies that it is addressed to those entrepreneurs who are registered in the Monthly Return Registry (REDEME). Although it is planned to gradually expand the group of self-employed persons to whom it is addressed.
Why is this an advantage for the self-employed?

The Agency’s intention is to promote the use of new tools and assistance systems aimed at improving compliance with tax obligations during the voluntary period. For this reason, the Pre303 service is an aid for the taxpayer’s self-assessment, a support for the self-employed to easily access data.

Since this is a new service, the AEAT has launched different channels from which doubts arising from Pre303 will be resolved:

A virtual assistant of the SII in the official website of the Tax Agency that automatically answers
A phone to call in case of any questions 915548770

Main changes in the Income Tax Return 2019

In the resolution adopted last December, there are three new features in relation to the model income tax return. It should be noted that this is simplified from the model of previous years:

Identification of the taxpayer’s tax domicile.
New data completion for real estate capital income.
New regulation of the personal income tax register books for economic activities in direct estimation.
Identification of the taxpayer’s tax domicile

The Tax Office is currently finalizing an Order regulating the income tax and wealth tax return models for income obtained during the year. This new measure affects the information related to all those properties of which the taxpayer is the owner or usufructuary.

The novelty consists in offering separately from the rest of the declaration the section of identification or ratification of the current tax domicile of the taxpayer.

In this way, in a very simple and intuitive way, the taxpayer will ratify or modify, if applicable, the last available tax domicile.

Re-completion of data for income from real estate

The tax fraud prevention campaign introduces for the 2019 income tax return that information on the property owned or used by the taxpayer must be submitted this year. The taxpayer must report on each property, the use or uses that the property has had during the year, indicating:

If you have constituted your habitual residence
In the case of your ex-spouse and minor children
If you have been involved in an economic activity
In addition, a new Annex “D” has been created, to be filled in voluntarily, in which taxpayers may enter the tax number of the suppliers of certain expenses, as well as their amount: repairs, painting, legal or economic advice, purchase of materials, household appliances or furniture.

Why are these changes made?

The aim is to detect fraud in:

Undeclared income from the rent or use by third parties of the property. (Real estate capital yield)
Undeclared income derived from the ownership of the property (Imputation of real estate income)
Unrealized expenses
New regulation of income tax records for economic activities in direct estimation
On 1 January 2020, the new regulations on the keeping of personal income tax records came into force, and will be applied to the entries in the register corresponding to the financial year 2020 and subsequent financial years for Income from economic activities in direct estimation, obliging a more detailed breakdown of income and deductible expenses.

The entries in the sales and income and purchase and expenditure records shall include the tax identification number of the counterparty to the transaction (name and surname(s), company name or full name and tax identification number of the recipient or the party obliged to issue it).

Compatibility with other books: It makes the personal income tax record books compatible with those required for VAT, through a single computer format that is fully consistent with the regulations and with the personal income tax return model, reducing the formal obligations to almost one and a half million taxpayers who will be able to keep a single record book that is valid for both personal income tax and VAT.

The Tax Agency will publish on its website a standard format for record books.

January is the month with the most tax obligations of the year. Remember that it is very important to comply with tax obligations, it never hurts for the self-employed to know about the changes so that they know what they are doing. That is why you should not forget to keep up to date with all the news the Tax Office is working on.


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