Each quarter companies and autonomo’s have to pay to Hacienda the tax withheld from their employees, or other professionals from whom they get invoices.This is done by means of the “modelo 111“ (tax-form #111).
In this form, you must report the tax name and number ( NIF/NIE) of every professional supplier or employee from whom you withhold part of the payment. Then you pay those amounts to the tax man on their behalf.
The payments done by means of modelos 111 during the tax year need to be consolidated in Modelo 190, which is then to be submitted once a year during the month of January. This does not involve a payment but is merely a summary with some additional information about the payments made during the year.
What is withheld? Tax or retention?
As a way to ensure the payment of income tax, the law puts the payer of the service/salary under the obligation to withhold part of the money due and pay it directly to the Tax Agency. This is done on behalf of the one receiving the income. This is the case with employers and companies who use the services of autonomos. A self-employed individual who invoices to companies must include in their invoices retentions, a reduction of the amount due, which the payer will withhold and later pay toward’s the tax of the self-employed person.
At the end of the tax year, the autonomo can request a certificate of the tax retained that he will use at the time of his tax return.
Deadline: by the 20th of April, July, October and January.
Payment: Amounts withheld. No fixed percentage. It depends on each case.
When are you obliged: employers in every case or companies that receive professional services from autonomos.
Notice: The most frequent misconception related to the payment of retention is believing that somehow they are included in one’s own income tax. In the situation where there is no business profit, many object to “having to pay tax”. However, this is not the companies tax, but part of the money that should have been included on the invoice but has been withheld temporarily by the company.
Warning: The obligation falls on the company. If the company pays the total amount to a professional without withholding the corresponding part, on finding out the tax man will claim the money from the company even if it means having to pay that money a second time!
See deadlines of most common “modelos” in this table.