Taxation in Spain is regulated by a broad legal framework and constantly updated. In this context, even small administrative errors or the omission of certain deductions can lead to a significant economic impact for individuals, the self-employed and companies.
Submitting a declaration after the deadline, not properly verifying the tax data or not keeping the supporting documentation are examples of situations that can be translated into sanctions, let’s analyse the most common cases that can lead to expenses for companies and individuals.
Deductions that are lost along the way
One of the most common mistakes is forgetting to apply deductions that correspond by law. It may be due to ignorance, not having the supporting documents at hand or, simply, not knowing that this deduction exists.
It often happens in the case of freelancers who do not include certain deductible expenses because they think they do not fall into the category or because they do not know how to justify them.
A typical example is the costs of supplies in the case of working from home, or the deduction of part of the mobile phone bill if it is used for work.
It also happens with deductions for maternity, large family or for investment in habitual housing, which are forgotten in the annual declarations.
Each deduction not applied is money that remains in the hands of the Treasury when it could have remained in the taxpayer’s pocket.
Out-of-time declarations: small fines that grow
Another classic is to submit declarations after the deadline. It may seem like a minor offence, especially if only a few days have passed since the deadline, but the Treasury is not exactly lenient in these cases.
Penalties for late filing without prior requirement usually start out being “small” compared to other fines, but if the debt is not paid on time or the delay is repeated, the surcharges accumulate.
The most delicate thing is that this type of failure can break a taxpayer’s compliance history, something that the Spanish Tax Agency takes into account when deciding the severity of future sanctions.
In the case of companies and the self-employed, in addition, a delay in submitting quarterly VAT returns or withholdings not only implies paying surcharges, but can generate cash flow problems for not having planned the cash flow well.
Do not review drafts and tax data
The Tax Agency provides drafts and preloaded tax data. However, that comfort has generated a false sense of security. Many people confirm the draft without reviewing it thoroughly, thinking that if the Treasury has prepared it, it will be perfect.
The reality is that the data handled by the Agency are those that companies, banks and other agencies have communicated to it, but they do not always include everything that the taxpayer can declare in his favour.
If you have had several employers, income from abroad, deductible expenses or any less common situation, it is very likely that the draft does not contain everything.
Blindly trusting the draft can mean paying more than the bill or, on the contrary, receiving a request months later because information is missing.
Confusing personal expenses with business expenses
This is a typical mistake in the self-employed and small entrepreneurs. Sometimes, due to lack of control or a too “creative” interpretation of the law, they try to include personal expenses as if they were deductible for the activity.
It is true that there are gray areas, for example, the use of a vehicle for both work and personal purposes.
However, the Tax Agency is usually very strict and, if the direct affectation to the activity cannot be demonstrated, the expense is not accepted.
The problem is not only that they reject the deduction, but that it can entail sanctions for trying to deduct something inappropriate.
In the long term, these types of practises, even if they are due to ignorance, generate a history of risk before the Treasury.
And that makes, in future reviews, the eye more critical.
Not foreseeing the fiscal impact of certain operations
There are decisions that seem good from a business or personal point of view, but that fiscally are a trap.
For example, selling a property without properly calculating the capital gain and the tax that will have to be paid later, or distributing dividends without considering the applicable tax rate.
It also occurs with inheritances or donations, where the urgency to close family procedures leads to signing without having done a previous tax study.
The result is that, when the tax settlement arrives, the figure is much higher than expected and, sometimes, the inherited assets are not available to pay it, which generates an added problem.
The key is not to improvise: any operation that involves a patrimonial change should be accompanied by a tax analysis before executing it.
Underestimate the importance of a good documentary archive
Although it sounds bureaucratic, having the receipts, invoices and documentation in order is one of the best defences against errors and sanctions.
Without papers, any deduction or expense that you try to justify is left in the air.
Many sanctions do not come from bad faith, but for not being able to prove what is declared.
A deleted ticket, a lost invoice or a contract that was never filed correctly can make the Treasury not accept a legitimate expense.
And in taxation, the burden of proof almost always falls on the taxpayer.
Preventing is cheaper than correcting
All these mistakes have something in common: they can be avoided with a minimum of foresight, organisation and advice.
In tax matters, correcting is always more expensive than preventing.
The regulations are complex, change every year and have exceptions, so, more than trying to learn everything, the key is to know when to ask for help and not leave things for the last moment.
A good tax control not only avoids fines and surcharges, it also guarantees that you do not let slip deductions that correspond to you.
In short, it’s about taking care of your money as much as you take care of your business or your personal economy.
Asesoria Orihuela Costa, your advisor
At Asesoría Orihuela Costa we have been helping individuals, freelancers and companies for 19 years to avoid precisely these mistakes.
Our philosophy is clear: explain taxation to you in a simple way, without unnecessary technicalities, so that you can make appropriate decisions.
