Introduction

Sometimes, when the time comes to settle quarterly VAT and income tax (IRPF) payments, we may lack the necessary funds to meet our tax obligations. The Tax Agency offers a relatively straight forward solution: you can postpone tax payments, provided you can justify your financial difficulties. In this article, we'll walk you through the step-by-step process of requesting a tax payment deferral and how using tools like vualapp.com can make the process smoother.

Who Can Postpone Tax Payments?

Any self-employed individual can request the deferral, and it won't result in having a debt with the Tax Agency. Even if you request a deferral, you'll still be up to date with your payments to the Tax Agency.

What Amounts Can You Postpone?

You can't request a deferral for a debt less than 300 euros. If you wish to defer an amount up to 30,000 euros, you can do so without providing collateral. However, if the debt exceeds this amount, you'll need a guarantor, and the process will be more complex.

How Much Will It Cost to Postpone Tax Payments?

Unfortunately, requesting a deferral isn't free. You'll be required to pay the interest rateset annually in the General State Budget. In 2016, the interest rate for deferrals and installment payments of tax debts stood at 3.75%. If the debt to be deferred exceeds 30,000 euros and you provide collateral, the applicable interest will be the legal interest rate.

Procedure for Postponing Tax Payments

Start by filing your tax return using Form 303 for VAT or Form 130 for IRPF. You can make the deferral request through the Tax Agency's Electronic Office when submitting your tax return. Usually, you'll need to select the option "Recognition of debt with a deferral request" in the respective form.

You can also request a deferral if non-payment has already occurred, and the Tax Agency has initiated the enforcement procedure. However, it's advisable to manage your cash flow effectively to determine if you'll need to request a deferral in advance. This will help you avoid surcharges and potential seizures.

Keep in mind that if you have the liquidity to cover a portion of the tax, you can still request a deferral for the remainder.

Requirements for Requesting a Deferral

To successfully request a deferral, you'll need to:

Provide a proposed payment schedule. Since there are no specific regulations regarding deferral deadlines and amounts, it's up to you to propose when and how you want to make the payments. Create a payment calendar outlining the amounts to be paid in each installment. Avoid proposing too many installments; typically, 3 or 4 installments or 2 installment payments are reasonable to prevent rejection by the Tax Agency.

Explain the reason for needing a deferral, such as "temporary lack of liquidity." 

Submit documents that justify your lack of liquidity for paying the specific tax, such as copies of invoices issued to your clients but not yet paid.

Arrange for payments to be debited from a bank account.

The Tax Agency usually notifies its decision within about 12 days. They may approve your request, reject it, or propose an alternative payment plan.

What Happens If You Can't Make a Payment?

Suppose the due date for one of the agreed-upon payment installments arrives, and you can't make the payment. In this situation, it's best to personally visit a Tax Agency office to renegotiate a new payment schedule with extended deadlines to reduce the installment amount.

If you miss the payment deadline and fail to make the payment, the debt will enter the enforcement process. The Tax Agency will apply a 20% surcharge. When you make the payment, it's advisable to visit an office with the receipt to ensure they are aware of the payment, preventing further enforcement actions. This is because the Tax Agency doesn't check payments daily and might initiate account seizures.

For better financial planning and streamlined invoice handling, consider using vualapp.com. This software automates invoice extraction, making it easier to manage your finances and ensure timely payments.