02 Jan Tax innovations 2020 for the self-employed and small or medium-sized businesses
With the start of the new year, the time has come to review the measures that will affect the activity of the self-employed and SMEs.
Once again, it should be noted that some of the measures discussed below are in the air because of the current political context. Many of them have been announced in three different ways, although without much of a programme:
In the proposal for the General State Budget 2019 between the PSOE and the United Nations, we can say that it never materialized due to the still political blockade.
In the electoral programs of November 10 (10N) of the ruling party in office and the one headed by Pablo Iglesias.
After the celebration of the 10N, in the agreement signed by PSOE and United We Can for the formation of Government.
Although there are uncertain measures, there are also other novelties in tax and accounting matters whose implementation is certain in 2020 and which we will compile in the next lines. If you want to catch up and make sure that they are properly complied with, contact Gran Marbella Consulting.
Changes to the self-employed’s accounting books
From 1 January 2020, the accounting for the self-employed will also undergo changes and additions.
In the personal income tax register books, both for sales and income and for purchases and expenses, the self-employed in simplified direct estimation (self-employed who keep their accounts in accordance with the Commercial Code are excluded) have to add the Tax Identification Number (NIF) of the counterpart before any operation.
In the case of the self-employed who, due to the type of economic activity, have to issue simplified invoices without the need to identify the recipient, it will be sufficient to record this in a daily summary entry.
The application of these changes will be effective in the registry entries corresponding to both 2020 and subsequent years.
In addition, the regulatory changes in the personal income tax book seek to homogenize the accounting obligations of the self-employed in such a way that these new entries are already being included in the VAT register, which has also undergone recent changes.
Among the most important changes in the new format of the VAT register books are
The reordering of the columns dealing with information on the “Type” and “Country code” of the receiving VAT number or the issuing VAT number, “transaction key” or “total invoice”. This relocation responds to visual review criteria.
The addition of the fields “Surcharge type Eq” and “Surcharge fee Eq” for those traders in the Surcharge Equivalence regime.
The addition of the columns “Substitute Invoice” in order to avoid a negative annotation to cancel the original simplified invoice and “Final Number” to facilitate the global summary entry of both issued and received invoices.
New draft of VAT and Corporate Tax
In the context of the Strategic Plan 2019-2022, the Treasury has planned a series of actions with a dual objective:
To improve the technical tools available for taxpayer service and assistance.
Control tax fraud.
One of the specific measures of this Plan involves a new draft of VAT which will begin its pilot phase in February 2020. Through this project, the Treasury will offer some users a draft of the Model 303 with which to make the VAT self-assessment on a quarterly basis, which, as in the case of the Income Tax Return, can be reviewed, modified if necessary, and the tax can be presented telematically and instantaneously.
As we have commented in this pilot project, a specific group of self-employed workers and SMEs will participate; those attached to the Immediate Supply of Information (SII) and with a volume of operations of less than 6 million euros will be able to be beneficiaries of this new system.
In the case of companies, work is also underway on a similar draft of the Corporate Tax with the transfer of tax data to the taxpayer in order to facilitate the filing of the return.
Goodbye to the presentation of these models by SMS
Forms 190, 347 and 390 corresponding to the financial year 2019 shall be submitted using the help form or by file, and the option to submit the declarations corresponding to 2019 by SMS shall also disappear.
Integral Digital Assistance Administrations (ADI)
Also in the roadmap of the Strategic Plan 2019-2022 of the Treasury Department is the creation of Integral Digital Assistance Administrations (ADI); an initiative that seeks to support the work of the Treasury Department offices with electronic and telephone assistance.
Requirements for being in modules in 2020
Once again, the limits to continue to tax under the objective estimation system are extended for the fourth consecutive year, so that the limits established by the 2015 tax reform to tighten the conditions of modules will not be applied in the end. Thus, in 2020, the limit of 250,000 euros per volume of income and 125,000 euros per invoicing to companies and professionals remains.
Operations with the United Kingdom after Brexit
The results of the latest elections in the UK show that they intend to leave the UK as soon as 2020 begins on 31st January. This divorce will clearly affect the self-employed and SMEs that do business with the British Isles; operations that at the time of departure will cease to be intracommunity to become imports or exports. This will oblige self-employed workers and SMEs to apply for the EORI and go through the relevant customs formalities, and to stop declaring these operations on form 349 for intra-community operations.
It should be noted that extra-community operations, exports or imports of goods are exempt from VAT.
There are no notable new developments in the deadlines for filing tax obligations for the self-employed and SMEs. Consult the 2020 tax calendar published by Infoautonomous with the official dates set by the Treasury.
What’s to come, or not?
As we mentioned at the beginning of this article, a compilation of fiscal news in 2020 for the self-employed and SMEs, the lack of a de facto government leaves programmatic proposals in the air.
If what we have seen so far are the safe measures, what follows are the projects announced by the current government in office, to reach a successful agreement with its potential partner in government United We Can with who already agreed the failed General Budget 2019.
Fiscal justice, anti-fraud law and new taxes
“Those who have more economic capacity must contribute more to the guarantee of social rights. The socialist party programme aims at “fairer taxation”. And under that premise, and pending confirmation of the fiscal measures, we are focusing on some of the reforms projected by the failed 2019 Public Accounts agreed by PSOE and United We Can. Many of them would affect taxpayers and companies with high incomes and profits and are aimed at increasing the collection of the State’s coffers.
These measures are included in the Stability Programme 2019-2022 that the current government sent to the European Commission in April 2019. This programme also includes measures to combat fraud and the creation of two new tax figures. With all this, the measures that could see the light of day in 2020 are
Increasing personal income tax at high incomes
The increase of two points is considered on the general basis of incomes over 130,000 euros per year and four points if they exceed 300,000 euros.
2020 could be the year in which legislation is passed on the four-point increase in income from capital exceeding EUR 140,000.
There is also talk of a review of some current personal income tax deductions, such as that relating to investment in pension plans.
Increase in Corporate Tax
If a socialist government is formed, it seems very likely that 2020 will be the year in which a reform of corporate tax will materialize, which would especially affect large companies. Those with a turnover of more than 20 million euros would be required to pay a minimum tax of 15%.
Cash payment limit of 1,000 euros
In the draft bill of anti-fraud measures in stand by due to the lack of public accounts and government agreement, it proposes to reduce the limit of cash payments from the current 2,500 euros to 1,000 euros.
In order to control tax fraud it is also intended to prohibit the use of double accounting software to avoid the economy in B.
Implementation of the Google tax
2020 could also be the year in which the tax on the digital economy, the Google tax, comes into force, although this tax, which would tax 3 % of online advertising services, would only affect large companies.
The intention of the foreseeable next government is to use taxation to fight climate change. The equalization of tax rates for gasoline and diesel could be achieved definitively in 2020 through this planned green taxation that would affect the self-employed and SMEs in the transport sector or those who use their vehicle for travel related to the development of the activity.
So far this compilation of the new tax and accounting developments for the self-employed and SMEs. We emphasize the importance of having expert help to adapt to everything that will come imminently. Contact Gran Marbella Consulting.