On October 5, the Supreme Court ruled establishing the following legal doctrine: “Maternity benefits received from Social Security are exempt from Personal Income Tax“.
Specifically, the Supreme Court considers that the maternity benefit paid by the National Social Security Institute may be incardinated in the case provided for in the third paragraph/letter-h of article 7 of the Personal Income Tax Act, when it provides that “other public benefits for birth, multiple birth or adoption, adoption, dependent children and orphanhood shall also be exempt”.
Thus, it opens the possibility of claiming the return of the IRPF paid for maternity or paternity benefits. During the 16 weeks that the leave lasts. And in case the Treasury accepts the rectification, it would return the amounts unduly paid, plus the corresponding delay interest.
Maternity Benefits – Who can claim?
Only parents who received Maternity Benefits in the years 2014, 2015, 2016 and 2017.
However, those who have already received a final administrative decision will not be entitled to a refund. Obviously against the return of personal income tax relating to the year in which the benefit was declared.
As an exceptional case, also those who were entitled to the benefit before 2014, to this day, are still pending resolution of the appeal raised on this matter.
How to claim?
The way to claim the return of what was unduly paid by Personal Income Tax will be as follows:
- submission to the Tax Agency of a request to rectify the self-assessment of personal income tax with return of undue income.
This request must indicate the amount corresponding to the refund. This must be accompanied by a copy of the Personal Income Tax return for the year being rectified.
If you receive the benefit in two different years, you must request a refund for each of them.
How much will they return?
The amount of the refund is not the same for all cases. It will depend on the benefit received and the rate applicable to the income tax return, taking into account the rest of the income received in that financial year.
Therefore, it will be necessary to carry out a simulation of the income tax return for the year in question, eliminating the maternity or paternity benefits received. Requesting from the tax administration the resulting difference in the tax liability with respect to the original tax return.
Claim period
The request for rectification can be made within 4 years. To be taken into account from the day following the end of the period for filing the claim. Or also from the day after the filing of the declaration, if it was submitted after the deadline. According to this, the deadline for requesting a refund corresponding to fiscal year 2014 (voluntary deadline) would end on 30/06/2019.
Maternity benefits for children born in 2018
Pending the tax administration formally pronouncing on the new criterion indicated by the Supreme Court, it can be concluded that in the next Personal Income Tax return, which will be filed between April and June 2019, taxpayers will already be able to consider the amounts received for the maternity benefit exempt, without the need to tax them.
In addition, taxpayers who received less than €22,000 in 2018 from a single payer will not be required to file an income tax return. Since this benefit will not be considered as coming from a second payer which would reduce the limit for filing the return.
Other indirect consequences
In addition, this judgment not only opens up the possibility of claiming the taxation of maternity benefits. It also opens up the possibility of claiming benefits not enjoyed because this benefit has not been considered exempt. This increases the declared base for the purpose of receiving other public aid depending on the declared income, such as scholarships, social bonds, rental aid, guaranteed social income, or other similar aid.
Technical aspects
Finally, indicate that while waiting for the Tax Agency to pronounce on the technical aspects of the request; the tax technicians are already requesting the convenience of an “online” procedure.
That facilitates the rectification of the corresponding return declaration and request through a computer system.
And that it allows to modify in an intuitive way the tax returns.
For any doubt or help, please contact us.
Arrabe Integra
Fiscal Department
