The end of the year is approaching and, besides celebrating Christmas, this means that both self-employed workers and SMEs have to file a tax return for tax year 2021 with the Spanish tax authority.
Information required to close tax year 2021
When beginning the process to close a tax year, in this case tax year 2021, certain data is required for the December payroll.
Invoices issued by professionals
To correctly present the annual summaries of withholdings and payments on account, i.e. forms 190 and 296, information must be presented relating to all invoices that include IRPF (Personal Income Tax) withholdings issued by professionals (suppliers) who have provided professional services to the company in the course of the year.
It is also necessary to declare the total sum of the contributions made in the course of 2021 to Pension Plans and Business Social Welfare Plans established for employees, and to provide the original document showing when the Plan was established, so we can ensure the correct tax treatment of these contributions (form 345).
Work performed abroad
Another important point is to declare the number of days that workers travelled abroad in the course of 2021. This is because they may be eligible for the exemption established in article 7p) of the Law on Personal Income Tax.
Benefits in kind
The way in which workers receive their salary may vary according to each company. Therefore, when all the information is prepared to close the tax year, it is obligatory to include in payroll all the benefits received by the worker, not only those in the form of money, but also benefits in kind, regardless of the way in which these are treated by the tax authority and social security. In summary, in addition to monies received, payroll must also include benefits such as RSUs, stock options, medical insurance, life and/or accident insurance, company car, accommodation, gifts (trips for the employee and their relatives, Christmas hamper…), etc.
It should be noted that RSUs, stock options and other products that consist in giving employees shares have tax benefits for the worker, if a number of requirements are met.
If in the course of 2021 a worker in the company has completed any training, application may be made to the State Foundation for Training in Employment to receive a Social Security bonus. It is recommended to have all the information ready by 20 December, in order to apply within the period stipulated.
For this purpose, it is necessary to send the completion certificates of the courses taken in 2021 which have not already been applied to social security.
Preparing tax year 2021
At this time of year, as well as having to present the year end, the next tax year must also be prepared. And if the deadline for closing the year is 31 December 2021, the new tax year must be ready before 1 January 2022.
These are the 3 important points to keep in mind:
1. The necessary information about non-resident employees in 2021 must be presented in order to confirm the tax regime applicable to them in the year 2022.
2. Communication must also be made of whether, due to the volume of its turnover, the company should now be considered a Large Company for tax purposes, or if on the contrary it no longer has this status. This is relevant, because Large Companies must present form 111 on a monthly rather than a quarterly basis.
3. Finally, prior notice must be given of cases in which a worker is relocated outside Spain. In this way, and to maintain the worker’s contributions in Spain, Social Security will issue the certificate A1, which must be given to the worker.
“You will never work alone”. This is our motto, because at ROSCLAR we work side by side with our clients at all times. Our clients will be able to relax at the end of the year and enjoy their Christmas, because our tax advisors will work together with them to ensure that tax year 2021 is brought to a close simply and efficiently.