The day you take somebody on, Modelo 111 appears
Modelo 111 is the return that collects the tax withheld from employment income and from the invoices of professionals. It is filed quarterly, or monthly where the size of the business requires it, and it has a feature worth grasping: that money is not yours. You deducted it from somebody else on behalf of the Spanish treasury, and you pay it over in that capacity.
Two things follow. The first is that debts for withheld tax fall within the cases the statute declares incapable of deferral: asking to pay them in instalments rarely ends well, and that is worth checking before the application goes in rather than afterwards. The second is that withholding badly — or not withholding at all — is not something you settle with the employee or the supplier: the duty to pay the money over belongs to whoever makes the payment.
Rented premises and Modelo 115
Where a business or a professional rents premises, an office or a warehouse, they are obliged to withhold on the rent paid to the landlord and to pay it over through Modelo 115, the quarterly return for withholding on property rent. The withholding applies to lettings of urban property and has a closed list of exceptions, so the first step is to check whether the particular letting is inside it.
The classic mistake is made by the landlord rather than the tenant: the rent arrives already net, the landlord declares only what was received and leaves out the withholding, which is precisely the amount standing to their credit. Money is lost by failing to declare income.
The reverse error exists too, and it is dearer. A tenant who never withheld anything, because nobody told them the obligation reached their premises, is the one the amount is claimed from, having already paid the rent in full and now having to find the withholding on top of it, with whatever surcharge the delay has added.
Modelo 190 is the annual summary of Modelo 111 and Modelo 180 the annual summary of Modelo 115. If the four quarters do not add up to the annual summary, the discrepancy surfaces without anybody looking for it. It is the most automatic check there is and also the easiest to avoid: you reconcile in December, before filing. If the notice has already reached you, it goes through replying to the tax office.
Gifts under the rules of Castilla y León
Gifts are taxed under the Impuesto sobre Sucesiones y Donaciones, Spanish inheritance and gift tax, which is a state tax but a devolved one: each autonomous community sets its own reductions and reliefs, and changes them fairly often. Castilla y León has its own for descendants and for a spouse, usually conditional on what the money or the asset is used for and on the gift being made by public deed before a notary.
We are not going to give you a percentage here: the amounts and the requirements move from one year to the next, and what applies is the rule in force on the day the tax falls due, which for a gift is the day it is formalised. What is fixed is the deadline — thirty working days — and the fact that the connecting point decides which community's rules apply, which matters a great deal when the donor or the money is abroad. It is in inheritance and gift tax.
Who writes to us from Valladolid
| Profile | What they bring with them |
|---|---|
| A practice or a clinic with two or three employees | Modelo 111 each quarter, Modelo 190 each year and the reconciliation between them |
| A company with a rented office | The Modelo 115 withholding and the Modelo 180 filed in December |
| Owner of premises let to a company | Declaring the gross rent and recovering the tax withheld |
| Parents helping a child with a deposit on a flat | Thirty working days, a public deed and the regional rule in force |
| A public employee with a second activity | Compatibility, census registration and two payers in the same annual return |
Our way of working in Valladolid
On a calendar, because obligations of this kind do not forgive a lapse: filing late produces a surcharge even where the figure itself was right. We are the ones who warn you, with room to spare, and we file after showing you the numbers.
We are lawyers and we keep the books with that in mind: not only that the figures add up, but that what was filed can still be defended if somebody asks about it three years from now. Where something is open to argument we say so, explain what it rests on and decide with you how much risk to take. What we do not do is tell you a review will go your way.
A building surveyor who leaves his payroll job and opens a practice in Valladolid: year one
An arquitecto técnico (the Spanish building surveyor and site engineer) with years at a construction company sets up on his own in March, rents a small office in the centre for 800 € a month plus VAT and works for developers and comunidades de propietarios (the owners' associations of apartment buildings). Everything he invoices carries withholding, and because this is his first professional activity he can ask for it to be 7 % in the starting year and the two that follow, instead of 15 %.
| Item (March to December) | Amount | Where it is declared |
|---|---|---|
| Invoiced fees | 42,000 € | Income tax return |
| VAT charged (21 %) | 8,820 € | Quarterly Modelo 303 |
| Withholding applied by his clients (7 %) | 2,940 € | Subtracted in the income tax return |
| Office rent (10 months) | −8,000 € | Cost |
| Withholding he applies to his landlord (19 %) | 1,520 € | Quarterly Modelo 115, which he pays in |
| Self-employed contribution at the flat rate (86 € × 10) | −860 € | Cost |
| Professional liability insurance, professional association and software | −3,140 € | Cost |
| Net income | 30,000 € | Added to the January and February salary |
Because all his income carries withholding, he is outside Modelo 130. He is not outside Modelo 115: he rents premises and has to withhold on his landlord's rent even with a single receipt a month. And with 2,940 € withheld on 30,000 € of net income, the June return will show tax to pay: the 7 % eases cash flow, it is not the tax. Who qualifies for the flat rate is in the self-employed flat rate.
What that Valladolid practice files through the year
| Form | Deadline |
|---|---|
| 303 (VAT) and 115 (withholding on the office rent) | 1 to 20 April, July and October; for the fourth quarter, the 303 until 30 January and the 115 until the 20th |
| 111, if he hires a draughtsman | The same quarters, until the 20th |
| 390 and 180 | January |
| Income tax return | April to the end of June |
Two items missing from the table that still count. The VAT his landlord charges him, 168 € a month, is deducted in his own 303, so the office costs him 800 € and not 968 €. And that year's return will have two sources: the January and February salary, with the construction company's withholding certificate, and the activity from March. The employer withheld as if the year ended in February, and that too pushes the June result upwards.
The client withholds 15 % unless you tell them in writing that you are in your starting year or one of the two following. Without that notice the developer is right to withhold 15 %, and you cannot claim the excess back from them: it is recovered in your income tax return, a year later. One more detail: if you had already invoiced on your own before the payroll job, even a little, the 7 % may not be yours to use. It is checked before the first invoice, which is where everything starts, in the self-employed registration form.