When someone discovers that returns from past years are missing, the natural reaction is to ask for time before touching anything. It is exactly the other way round. Until the self-assessments have been filed there is no debt to defer, and the order in which things are done decides how much is paid in the end. This guide is about that order, and about a detail in article 27 of the Ley General Tributaria, the General Tax Act, that can cost a quarter of the surcharge to anyone who does not know it.
The right order, and why it is that one
- Calculate. Rebuild each outstanding year and know what comes out of each before filing anything. This is also where the order between years is decided, which has rules of its own that we cover in in what order several years are put right.
- File. Each late self-assessment generates its own debt, and only from that moment is there something concrete to defer.
- Apply for the deferral, in the same act as filing, by ticking the acknowledgement of the debt with a deferral request.
- Wait for the surcharge assessment, which arrives later and separately, with its own payment period.
Step four is the one that surprises people. The surcharge for filing late is not self-assessed on the form: the Administration assesses it afterwards and notifies it separately. In other words, a regularisation produces two debts with two different timetables, and confusing them is what loses you the reduction described below.
The two debts, in a table
| The tax itself | The surcharge | |
|---|---|---|
| How it arises | You self-assess it when you file late | The Administration assesses it afterwards and notifies you |
| When it falls due | On filing, unless a deferral is requested | Within the period in article 62.2 from notification |
| Can it be deferred? | Yes, if the item allows it | Yes, but with a consequence worth weighing |
| What happens if it is not paid | Enforcement period and the article 28 surcharge | The 25 % reduction is lost and it goes into enforcement |
The detail almost nobody mentions: the 25 % reduction
Article 27.2 of the General Tax Act sets the surcharge for a late return filed without a prior request from the tax office: 1 % plus a further 1 % for each full month of delay, and after twelve months 15 % with late-payment interest from the day after those twelve months are completed. So far, this is what almost everyone knows.
What follows is known to far fewer people. Article 27.5 allows that surcharge to be reduced by 25 %, but only if two conditions are met together: that the remaining amount of the surcharge is paid within the article 62.2 period opened by its notification, and that the whole debt resulting from the late self-assessment was paid when it was filed or within the article 62.2 period, or else within the periods of a deferral or instalment agreement applied for with a bank guarantee or a surety insurance certificate.
If you defer the tax from the regularisation without a guarantee (which is exactly what happens in the vast majority of applications, because below the exempt threshold none is required), the condition article 27.5 sets for the surcharge reduction is not met. The 25 % reduction falls away.
In other words: the most convenient way to defer is incompatible with the surcharge discount. It is not a hidden penalty or an arguable interpretation: it is written in the rule, and you can check it by reading article 27 in the consolidated text of Act 58/2003 in the BOE, the Spanish official gazette.
The sum to do before deciding
With that on the table, the decision stops being automatic and becomes arithmetic. An example with invented figures but the real mechanics: tax of 7,400 € for a year filed five months late, which puts the surcharge at 6 % on the article 27.2 scale.
| Option | Surcharge | What you need to be able to do |
|---|---|---|
| Pay the tax when filing | 444 €, reduced to 333 € if the surcharge is paid within its period | Have 7,400 € available now |
| Defer the tax without a guarantee | 444 €, with no reduction | Nothing: it is the automatic route |
| Defer the tax with a bank guarantee or surety insurance certificate | 444 €, reduced to 333 € | Obtain the guarantee and pay what it costs |
The difference in the example is 111 €. On tax of 7,400 € nobody takes out a bank guarantee to save 111 €: the cost of the guarantee eats it up. With a regularisation covering several years and a surcharge running to four figures, the sum can come out the other way. And in between there is a third route that is sometimes the best: pay the tax and defer only what cannot be paid, because the article 27.5 condition refers to the debt on the self-assessment, not to the surcharge.
The figures above are an example to show the mechanism, not a forecast about your case. The actual surcharge depends on the full months that have passed, and that is counted with the real dates in front of you.
Which part of a regularisation cannot be deferred
A regularisation covering several years is rarely uniform. If what has to be filed includes withholding returns (Modelo 111 for payroll and professionals, or Modelo 115 for rent), those debts are excluded from deferral by article 65.2.b), and there is no way round it. The same goes for corporate income tax instalment payments. And the VAT on overdue Modelo 303 returns falls under the rule on taxes passed on to customers, with the exception available if you show the VAT was never collected.
The practical consequence is that the items have to be separated before anything is filed, so that you know which part will have to be paid regardless and which part can be spread. The detail of each case is in the debts that cannot be deferred.
Two things to be clear about before you start
This whole scheme (a surcharge instead of a penalty, and the 25 % reduction) depends on the regularisation being spontaneous, meaning without any prior request from the Administration. If something has already reached you, the ground is different: we deal with it in what counts as a prior request and in surcharge, interest and penalty. A letter in your electronic mailbox that has not yet been opened may already have closed that door.
And the second: years that are time-barred are not filed. Before rebuilding four years, check which are still open, because voluntarily filing a year that is already time-barred is making a gift of a debt that nobody could claim. The rule and what interrupts it are in the limitation period, and what interrupts it.
How we go about it
With a file covering several overdue years, our first deliverable is not a return: it is a table with one row per year and per form, showing the tax, the months of delay, the surcharge that will come out, whether the item can be deferred and what falls due when. With that table in front of you, the decision to defer or not is taken in ten minutes with the numbers in view, which is the only way to take it well.
If you want us to put it together, tell us through the deferral form, and if the heavier part is the catching up itself, the way in is the late filing page. We do not guarantee any result before the Administration: what we do is put the sums in front of you before you decide, and warn you about what can go wrong.
A sample timetable, from start to finish
| When | What happens |
|---|---|
| Week 1 | The years are rebuilt and the table comes out: tax per form, months of delay and the expected surcharge |
| Week 2 | The late self-assessments are filed and, in the same act, the deferral application for the items that allow it |
| Days later | The decision granting the deferral arrives, with the schedule of instalments and interest |
| Weeks or months later | The article 27 surcharge assessment arrives separately, with its own article 62.2 period |
| That period | The surcharge is paid in order to keep the 25 % reduction, if the requirements are met |
The most expensive timing mistake is not in the first row: it is in the last. A surcharge that arrives four months later, when the client has mentally filed the matter away, gets paid late, and then the reduction is lost and the surcharge goes into the enforcement period as well.
Frequently asked questions about your tax debt
Can I defer the surcharge too?
The surcharge is a debt like any other and a deferral of it can be requested. But the 25 % reduction requires the remaining amount of the surcharge to be paid within the article 62.2 period, so deferring it has a cost that should be worked out first.
What if I do not have the money to pay the tax when I file?
You apply for a deferral. What you need to know is that if it is granted without a guarantee, the article 27.5 condition is not met and the surcharge reduction falls away. It is an informed decision, not a trap: sometimes it pays and sometimes it does not.
What happens if a request from the tax office arrives in the middle?
The whole regime changes. With a prior request there is no article 27 surcharge any more: there is an assessment and a possible penalty. That is why a spontaneous regularisation is done as soon as possible, not when there happens to be time.
Can one deferral cover all the years?
Everything that can be deferred can be grouped, and it usually makes sense to do so in order to have a single timetable. What cannot go in are the items excluded by article 65.2, which have to be separated out before filing.