Amendment to Article 27 of the General Tax Law

On July the 9th, 2021, Law 11/2021, on measures for the prevention and fight against Tax Fraud, was published. This law has brought about significant Tax changes. In this article, we will focus on one of them, which corrects the surcharges applied when Tax Returns are filed late.

Specifically we are referring to section 2 of article 27, Surcharges for late filing without prior notice, of the General Tax Law (hereinafter, LGT).

The previous wording stated that if the self-assessment or Tax Return was filed within 3, 6, or 12 months after the deadline for filing and payment, the surcharge would be 5, 10, or 15 percent, respectively. If the return was filed more than 12 months after the deadline, the surcharge would be 20 percent and would exclude penalties. In this latter case, if more than 12 months had passed, late payment interest would be charged for the period from the day after the end of the 12-month period following the deadline for filing until the date the self-assessment or tax return was filed.

• MODIFICATIONS:

The 5, 10, or 15 percent surcharges are eliminated. The new surcharge established by law is a fixed 1 percent plus an additional 1 percent for each full month the Tax Return or declaration is filed late. This would be the first tier.

For the period in which the submission is made more than 12 months after the deadline, the surcharge will be 15 percent instead of 20 percent, excluding penalties. Late payment interest for this period remains unchanged.

• EXAMPLE:

The taxpayer filed their Personal Income Tax return on August the 30th, even though the voluntary filing period ended on June the 30th. Under the previous wording, the surcharge would have been 5%, while with the new amendment, this surcharge would be reduced to 3% (1% fixed + 1% for each month completed (July and August)).

We can conclude that this modification is beneficial for the taxpayer, since it reduces these surcharges for filing the declaration late without prior request from the Tax Administration.

On the other hand, Article 27 of the LGT also includes a series of circumstances which, if they occur, will prevent the taxpayer from being charged surcharges, but we will discuss this in another article.