Late payment of non-resident income tax

Those of you who are not fiscal residents in Spain know that every year, come December, you need to pay taxes to the Spanish Tax Office. Normally this is a very painless process, as most people have fiscal representatives that take care of that matter, so all they need to do is either send the tax money to them so they can pay their taxes, or make sure that they have enough money in their Spanish bank account so that the Tax Office debits it directly.

Also, the Tax Office, in their efforts to make things easier for the tax payer, has an online facility whereby your fiscal representative can submit your tax return online, giving the amount you need to pay and your bank account number, and letting the Tax Office collect the money whenever the time comes.

Although this system is excellent and should be foolproof, unfortunately we have found that it also has its disadvantages…

Firstly, we cannot confirm exactly to our clients when the Tax Office is going to debit their payment, so we have to stress how important it is that they ALWAYS have that amount available in their account. Of course, most of them only need to have an unusually high utility bill or an unexpected debit (like their annual house insurance, for example, or the bank’s account maintenance charges…) to find that the money they had put aside for their taxes is no longer available.

Another problem we have found is that some banks still have not updated their clients records, or that they still have their old passport number as NIF in their account, instead of their NIE number. When the Tax Office’s payment request (using the taxpayer’s NIE as reference) is checked by the bank’s system (which has the taxpayer’s passport number as reference), because the identification reference numbers don’t match, the system automatically rejects the payment request and the taxes do not get paid.

We have found all of the above through receiving over 150 letters from the Tax Office informing us that the non-resident taxes for some of our clients, which were submitted in July and August, could not be collected, and that they need to be paid now, late, with a 20% fine for late payment.

How can we avoid this happening in the future? By making sure that we always have more than enough balance on our bank accounts and checking it and topping it up regularly (tax returns that were submitted in the summer did not get charged to the client’s accounts until the last week of December!!) and also, by making sure that, next time we are in Spain, we pop along to our local branch and UPDATE our details on the account and let them have a copy of our NIE number.

If this has happened to you, you are more than welcome to contact us for further advice.

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