Tax novelties in Law 58/2003, of December 17, 2003, General Tax Law introduced by Law 11/2021

Article thirteen of Law 11/2021, of July 9, on measures for the prevention and fight against tax fraud introduces a series of changes to Law 58/2003, of December 17, 2003, General Tax Law (LGT).

The regulation includes important new aspects regarding the voluntary regularization of the tax situation, making it much more advantageous for taxpayers.

Reduction of surcharges for late filing of returns or self-assessments without prior requirement (article 27 LGT).

Prior to the approval of Law 11/2021, the surcharges for voluntary late filing of returns or self-assessments amounted to 5/10/15 or 20% depending on the time elapsed (3/6/9/12 months) from the end of the filing period. Additionally, interest was accrued after one year.

The new regulation establishes that the surcharge will become a percentage equal to 1% plus an additional 1% for each full month that the self-assessment or return is filed late with respect to the end of the period established for filing and payment. If the self-assessment or return is filed after 12 months have elapsed since the end of the deadline for filing, the surcharge will be 15 percent plus the corresponding late payment interest.

If, for example, the self-assessment is filed after 3 to 4 months have elapsed, the surcharge under the new system would be 4% (compared to the 10% that would have been due under the old rule), which represents a difference of 6%. In all the brackets, the new regulation is more beneficial for the taxpayer under the new system.

This modification means moving from a system of fixed surcharges to a more proportional and fairer one, as explained in the Preamble of the regulation itself, with the surcharges being modulated and depending on the specific time elapsed. This is intended to encourage voluntary regularization in the shortest possible time.

Likewise, a new feature is the exemption from the surcharge regime when the taxpayer regularizes facts or circumstances identical to those regularized by the Administration with respect to a specific tax concept, referring to another period, provided that certain circumstances are met:

  1. that the return or self-assessment is filed within six months from the notification of the Administration's liquidation;
  2. that the amount resulting from the liquidation is paid;
  3. that no appeal is filed against the liquidation; and
  4. that the regularization does not result in the imposition of a penalty.

Compliance with these requirements may be problematic, insofar as it could happen that, when the six-month period expires, the taxpayer still does not know whether a penalty proceeding is going to be opened, since the Administration has an equal period of six months to impose a penalty (the period is extended from 3 to 6 months by amendment of art. 209.2 LGT by this same law).

This new system of surcharges applies from the day following publication in the BOE, i.e., from July 11, 2021. However, a transitional regime is established, whereby it will also apply to surcharges levied prior to its entry into force, provided that it is more favorable for the taxpayer and the surcharge has not become final.

Reduction of penalties (Article 188 1 and 3 LGT)

Law 11/2021 has also led to an improvement for taxpayers in terms of tax penalties, which have been reduced. The modification has two aspects. On the one hand, the reduction of penalties foreseen for the signing of tax assessments with agreement in an inspection procedure is increased to 65 percent (compared to the previous 50 percent). On the other hand, the reduction for prompt payment and not filing an appeal or claim against the settlement or sanction increases from 25 to 40 percent.

The new reductions foreseen in paragraphs 1 and 3 of Article 188 of the LGT will be applied in the same way to penalties agreed before its entry into force, provided that they have not been appealed and have not become final. The new reduction provided for in paragraph 3 of article 188 of the LGT (40%) will also apply if the following circumstances are met:

  1. the withdrawal of the appeal or claim filed against the penalty and, if applicable, against the settlement from which the penalty derives, between the entry into force of the law and until January 1, 2022, and
  2. the payment of the remaining amount of the penalty is made within the voluntary payment period (art. 62.2 of the LGT) opened with the notification after accreditation of the withdrawal.

The purpose of this measure is to favor those taxpayers who are willing to reach agreements with the tax administration without having to undertake costly procedures in terms of time and money.

Lozano Schindhelm has extensive experience in the regularization of all types of taxes, as well as in the assistance, advice and representation in open inspection proceedings against individuals and legal entities.

We recommend tax residents and non-residents in Spain who have not complied with their tax obligations within the legally established period, to regularize such situation immediately, taking advantage of the benefits introduced by Law 11/2021, in particular the reduction of surcharges for late filing.

Autor: Claudia Cascant