Has your client declared retention of your invoices?

• When we are self-employed, as a general rule, we must apply personal income tax withholding on the invoices we make to other businesses.
• It is your client who must make that payment to the Treasury as professional withholdings.

When we are self-employed, as a general rule, we must apply personal income tax withholding on the invoices we make to other businesses. This amount is an advance that is made as personal income tax to the Treasury and will be taken into account in the annual personal income tax return. But, although it is you who pays this amount, It is your client who must make that deposit in the Treasury for professional withholdings.

However, there are uncontrollable situations where clients do not correctly declare their corresponding withholding. These cases are usually frequent when invoices are issued at the end of the year. Therefore, it is convenient to know all the current legal circumstances and the procedures available to regularize this situation, in the event that clients have not correctly carried out their personal income tax withholding.

Options to regularize withholding

It is important to mention that the client always has the obligation to make the payment corresponding to the personal income tax withholding (form 111) within the period and in the manner established by tax legislation. This process is essential to guarantee the correct functioning of the tax system and so that both the taxpayer and the state comply with their respective obligations.

However, in cases where this retention has not been made, there are two scenarios:

A) Make a complementary declaration using form 111

Customers will have the option to file the supplemental return to include the withholding portion that has been omitted. This option is highly recommended if the forgetfulness is detected within a reasonable period of time and with a few days delay. Therefore, making a supplementary declaration is an efficient solution and avoids additional problems.

If the client realizes the error, without a request from the Treasury, he must present it as soon as possible. In this way, only the following surcharges will be added to the amount you enter:

• In less than three months: 5 % surcharge
• Between three and six months: surcharge of 10 %
• Between six and twelve: 15 % surcharge
• In more than twelve months: surcharge of 20 %

If, on the other hand, the Tax Agency finds out beforehand, you face a sanction whose basis will be the following:

• Minor infraction: penalty of 50 % of what was not entered
• Serious infringement: penalty of 100 %
• Very serious infringement: sanction of 150 %

B) Declare the withholding in the following personal income tax return

If the client does not submit the supplementary declaration within the established period, they can choose to include this type of withholding in the next income tax return. This option It is not the most recommended to do, since it can be seen as improvised. Although it is not seriously harmful, it is preferable to avoid it.

Responsibility of the beneficiary of the withholding

In both scenarios described above, the issuer of the invoice has no responsibility or penalty, but as the beneficiary of the withholding, in the tax return, it is mandatory to declare the total amount of all income and withholdings that have been received, regardless of whether they are or do not coincide with the tax data that have been issued by the client. Failure to declare it could result in serious problems with the Tax agency and, therefore, the documentation required by the Treasury will have to be presented in case of discrepancy.

In cases where the Treasury verifies differences between the total amount of withholdings declared in the businessman's income tax return and the data they have about the clients, a prior data verification will be carried out.

Therefore, the ideal measure to avoid these future problems is to notify clients at the end of the year about the withholdings they have had throughout the year. In this way, if any error or delay is detected, rectification can be submitted through form 190.

In conclusion, it is very important to always comply with all Treasury obligations to be up to date in legal terms and avoid future tax problems. If a client forgets to declare your withholding, there are options to regularize the situation, such as submitting a supplementary declaration or including the withholding in the next income tax return. However, it is essential to communicate with clients at the end of the year to ensure that all withholdings have been reported correctly.