The Tax Agency (AEAT) has prepared a note with clarifications regarding the benefits derived from an ERTE (temporary employment regulation file) and the extraordinary benefit for cessation of activity. Specifically, it refers to the completion of form 190 corresponding to the financial year 2020, to be submitted in January 2021.
Clarifications ERTE and cessation of activity
Thus, in order to ensure the correct presentation of this information, the AEAT has answered the following questions:
- First, How are the benefits derived from the temporary employment regulation files (ERTEs) qualified?
- How can the collection of the benefits derived from ERTEs affect the obligation to file an income tax return?
- How are the amounts paid in temporary employment regulation files (ERTEs) declared in model 190?
- The amounts paid as extraordinary benefits for the cessation of activity received by self-employed workers, how are declared in form 190?
- How is the extraordinary benefit for cessation of activity received by the self-employed qualified?
How are the benefits derived from the temporary employment regulation files (ERTEs) qualified?
These benefits are classified as taxable work performance. They are not exempt from income tax.
How can the collection of benefits derived from ERTEs affect the obligation to declare for income tax?
The collection of benefits derived from ERTEs will imply in practically all cases that there are two payers of work income.
If a taxpayer has obtained during the year 2020 work income from two different payers:
- If the amount received from the second and remaining payers does not exceed 1,500€. There will be no obligation to declare for personal income tax if the total sum of income from work does not exceed 22,000€.
- When the amount received from the second and remaining payers exceeds 1,500€. There will be no obligation to declare for Personal Income Tax if the total sum of income from work received in the financial year does not exceed 14,000€.
How are the amounts paid in temporary employment regulation files (ERTEs) declared on form 190?
These are extraordinary measures to deal with the economic and social impact of the COVID-19 in terms of unemployment protection.
The benefits paid by an ERTE must be declared in model 190, with code C (Unemployment)
In the case of receiving benefits from inappropriate RPCs, which the recipient must later return, this must be taken into account:
- If the return occurs in the year 2020. The payer of these benefits shall submit the model 190 corresponding to the financial year 2020 reflecting only the corresponding net amount.
- If the refund is made in 2021. The payer of these benefits will report the amounts that have been returned on form 190 corresponding to 2021. With accrual year 2020 and negative sign.
How are the amounts paid as extraordinary benefits for cessation of activity received by the self-employed declared on form 190?
The amounts paid for this concept by the Mutual Collaborating Company with the Social Security or the Social Institute of the Navy under the Special Social Security Regime for Sea Workers must be declared on form 190, with code C (unemployment benefits and subsidies).
How is the extraordinary benefit for cessation of activity received by the self-employed classified?
The same as the “ordinary” benefit for cessation of activity of the self-employed regulated in articles 327 and following. LGSS, the extraordinary benefit for cessation of activity is a benefit of the unemployment protection system; according to Article 17.1.b) of the Income Tax Law, unemployment benefits are qualified as income from work.
Although its origin is in the economic activity of the self-employed person, it is not an inherent income. And therefore it cannot be qualified as an income from economic activities. Consequently, this benefit should not be included as another income of the quarter in the model 130 of income tax payment in instalments.
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