Introduction
In pursuit of digital transformation, Spain’s Tax Agency, driven by the European Next Generation funds, has been steadfast in its efforts to shift tax procedures online. While this transition aligns with broader plans for administrative efficiency, the recent modification in tax laws aiming to make online tax filings mandatory for self-employed individuals faces a significant hurdle— the intricacies of the 2023 Income Tax Campaign.
Digitalization Drive: The Spanish Government’s Vision
Embedded within the Recovery, Transformation, and Resilience Plan, Spain’s drive towards public administration digitalization became apparent in 2019 when the Tax Agency mandated self-employed individuals to file their taxes online. However, this directive faced rejection from the Supreme Court, prompting the government to revisit tax laws related to personal income and corporate entities.
Now, with the legislative amendments in place, the government seeks to enforce exclusive electronic filing for tax declarations by self-employed individuals, reinforcing their vision of a paperless Treasury. The overarching Digitalization Plan aims to streamline processes, emphasizing the need for the tax system to possess all taxpayer data in a digital format. This, in turn, fuels the government’s interest in compelling self-employed individuals to submit their tax declarations exclusively through online means.
Eradicating Paper-Based Errors: The Motive Behind the Digital Push
The primary rationale for discouraging paper-based tax declarations lies in the prevalence of errors in handwritten submissions. According to insights from the Tax Agency, approximately 60% of paper-based declarations contained errors, leading to delays in tax refunds. The transition to digital filing aims to mitigate such errors, ensuring a smoother and more efficient tax processing system.
Supreme Court’s Emphasis on Rights, Not Obligations
In its July 2023 ruling, the Supreme Court emphasized the right, not the obligation, of taxpayers to submit tax declarations, interpreting Article 96.2 of the Personal Income Tax Law. This interpretation necessitated an alternative method for the Tax Agency.
The court asserted that there was “legislative insufficiency for establishing electronic means as the only channel for filing the income tax declaration.” In other words, an alternative method was required, a stance not previously considered before the ruling.
Post the court decision, the government made a fresh attempt by introducing modifications to existing regulations. These changes enable self-employed individuals to submit their tax declarations at a Tax Agency office, where an official would input the provided data into the system and process the tax declaration on their behalf as an alternative means.
The Conundrum of the Income Tax Campaign and Self-Employed Individuals
Despite paving the way for this alternative method through the registered modification, the Tax Agency has yet to mandate online tax filing for self-employed individuals. The reason, as outlined in the Official State Gazette, is that it is legally stipulated that the obligation to file electronically can be established only if the Tax Administration ensures personalized attention to taxpayers requiring assistance in completing the declaration through such means.
The annual Income Tax Campaign poses the most significant logistical and personnel challenge for the Tax Agency. This period is deemed a “special period” subject to specific exceptions, including the exclusion of self-employed individuals from in-person tax processing—a privilege extended to other citizens.
The official appointment scheduling page for self-employed individuals explicitly states, “These appointment booking details are not valid for specific Tax Agency campaigns such as the annual Income Tax declaration. In any case, the in-person Income Tax preparation service cannot be used by self-employed taxpayers as the Tax Agency does not have all the data on economic activity returns.” Consequently, during the 2023-2024 Income Tax Campaign (April 3 to July 1, 2024), the Tax Agency cannot allocate personnel to process tax declarations for self-employed individuals, thereby failing to meet the Supreme Court’s requirement.
Inevitability Over Time: Upholding Personalized Assistance
As per the Supreme Court’s directive, the obligation to file electronically is contingent upon the Tax Administration ensuring personalized assistance to taxpayers needing help with the declaration through such means. If the Tax Agency cannot offer a viable alternative to online tax filing, it cannot enforce the obligation.
The intrusion of the Income Tax Campaign into the calendar only serves to delay the implementation of this obligation for self-employed individuals who continue to submit their declarations on paper, a format still utilized by 0.2% of self-employed workers. As the government navigates the complexities of digitalization, the impending inevitability of an all-digital tax filing system remains on the horizon, albeit deferred by the challenges posed during the Income Tax Campaign.