Instalment payment: the advance on what you will pay at the end
It is not a new tax: it is an advance that is deducted on the annual return. What is interesting is who has to file it, because plenty of people file it without having to.
The payment on account made during the year of a tax that is settled at the year-end.
There are three forms, according to who you are and which regime you are in:
- Form 130 — autónomos on estimación directa. 20% of the year's cumulative net income, less what was paid in earlier quarters and less the withholdings borne.
- Form 131 — autónomos on módulos, worked out on the income given by the indices.
- Form 202 — companies, in April, October and December.
The 70% rule
A professional does not have to file form 130 if at least 70% of their previous year's income was subject to withholding. The logic: their clients are already paying the tax in advance for them on their own form 111. You look at the previous year; in your first year, at that year itself.
An example with numbers
An autónomo on directa simplificada, at 30 September:
- Cumulative income after the 5%: €26,600
- 20 %: 5.320 €
- Less what was paid in the first and second quarters and less the year's withholdings.
That is why a bad quarter after a good one can come out at zero: the calculation is cumulative, not quarterly.
For companies, the method in article 40.3 of the Corporation Tax Act — working it out on the taxable base of the period itself — is compulsory when the previous year's turnover exceeded €6,010,121.04.
The mistake that comes up most
Forgetting to deduct the withholdings applied to you. That is what they are there for: if 15% is withheld from everything you invoice and you also pay over 20% of your income without deducting them, you are paying the same tax in advance twice.
Where this carries on in Cairos: Form 130 and the 70% rule.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
IRPF withholding
The amount the payer holds back from an invoice or a salary and pays over to Hacienda on account of the IRPF of whoever is being paid.
IRPF and withholdingsEstimación directa
The IRPF regime in which the income from the activity is worked out by deducting real deductible expenses from real income.
VATFiling period
The interval each self-assessment is worked out and filed for: quarterly as a general rule, monthly in a defined set of cases.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.