Limit Consulting 
Can you not pay your tax bill by the deadline? Is there something that you can do? Will you need a deferred tax payment? What is the worst-case scenario?
When you cannot pay your tax bill in time, you may have the option to apply for a concession in the way of a deferred payment or even an installment arrangement. However, this is not granted in every case. We explain here the different cases which you may find yourself in and what the options are in every instance.
Initially you can request to pay your whole tax bill at a later time, or even to pay in monthly installments. The reason to state is obviously a momentary lack of liquidity. This has to be submitted at the time of presenting your tax, that is, by the deadline. Otherwise, you will be fined for late presentation of your tax.
You can also state when you would like to pay it.( or in case of installments, the month of the first payment) But this is subject to approval. In practice they can revise and modify any of your parameters: number of installments, time to start or even if they accept it or not. You will finally be notified of Hacienda’s decision in a letter.
Will it be granted?
That will depend on a number of things.
- Type of tax bill.
Hacienda never grants petitions for deferring the payments of ‘Retenciones” or Withheld tax.
Withholdings tax are part of someone else’s tax that you withhold from the payment that you owe them such as your rent, wages or other bills.
Hacienda considers that you cannot allege a lack of liquidity in these cases when you have actually paid the other part of these bills and kept some funds aside for precisely making these payments. If you happened to spend it afterwards it does not seem to be a good enough reason.
In practice, this means that you cannot defer the payments of tax forms number 111 or 115.
- Amount too Large.
They will not grant a petition if the resulting amount is over 30,000 unless you provide a bank bond, or back it up with a property.
This will also be the case if your existing outstanding amount with Hacienda including the new tax bill will go over that limit. In other words, if at any given time your debt goes over 30,000 you have to provide a guarantee.
For example, if you already owed 20,000€, payable through a previously granted installment plan, you can not add to that amount in a new petition of 10000 more without being asked a bank bond.
( And it is even more difficult to obtain the bank approval than Hacienda’s!)
- Not a reliable record?.
If we failed to keep our commitment in a previous instance it is very unlikely that we will get it this time.
What if I cannot keep my commitment?
This certainly can happen if the number of installments that you were granted were not what you requested, resulting in a monthly bill larger than expected.
Once granted, if you failed to pay any of the installments you will receive a letter with a tax bill for the amount of the installment plus charges for late payment. After a few attempts to remind you of your commitment, they cancel the arrangement and the whole amount passes to a new level, in which they eventually will try to seize the money by means of embargoes to your bank accounts.
While remaining unpaid the amount continues increasing with interest and penalties.
Related:Embargoes in bank accounts.
And then what?!
You can find yourself in the awkward situation where you are not granted the paying plan or you fail to keep up with one and still have no liquidity to pay your tax bill.
Well, you can always pay what you can,when you can, without any fixed plan.
For this you just need to request a pay-slip with the amount that you wish to pay from Hacienda, and pay it at any bank.
The cons of paying in this way, which should be the last-resource option, are these:
Your debt’ status is ‘irregular’. As they do not know when you are going to pay next, they will keep on trying to seize the money by all means: embargoes to your account, car… (of course, all this takes some time to start happening…)
They can embargo your credits: this means that they write letters to your clients to claim for Hacienda the payments owed to you. And they are obliged to do it.!
Some of your clients may be obliged to have a “certificado de contratista” before they can pay you. This is a certificate that states that you are up-to-date with your payments to Hacienda.
This is a catch-22 situation, they will not pay you until you pay first.
Operating a business in this situation for an extended time can be daunting.
Certainly, something to avoid. If already there, take courage! Patience and consistency can take you out of a predicament like this.
