IRPF withholding: money the client does not pay you
It appears deducted on your invoice and reaches Hacienda in your name. It is neither a discount nor an expense: it is your own tax, paid in advance.
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.
Article 101 of the Personal Income Tax Act and article 95 of its regulations set the rates for professional activities:
- 15% as a general rule.
- 7% in the year the activity starts and the two following years, notified in writing to the payer. Without that notification, the payer has to apply 15%.
- 2% on farming, livestock and forestry activities, and 1% on pig fattening and poultry.
- 1% on certain activities on módulos.
Separately from article 95, the 19% on the letting of urban property is in article 100 of the regulations, and is declared on form 115.
When you withhold and when you do not
Only when the customer is a business, a professional or an entity obliged to withhold. You do not put withholding on an invoice to a private individual: they have nowhere to pay it over.
An example with numbers
A professional's invoice to a company:
- Base: €1,000 · VAT 21%: €210 · Withholding 15%: −€150
- You are paid €1,060
Your client pays that €150 over on their form 111 and it appears on your annual return as payments already made on account. If a lot is withheld from you, your annual return comes out as a refund.
The mistake that comes up most
Putting withholding on invoices to private individuals. A physiotherapist invoicing patients withholds nothing, and if they do they are deducting money from their own fee that nobody is going to pay over in their name. The opposite — not withholding when you should — is also punishable, but for the payer.
Where this carries on in Cairos: Form 111 for withholdings.
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.
Taxable base
The total consideration for a transaction before VAT is applied to it: what you really charge for your work or your goods.
IRPF and withholdingsInstalment payment
The payment on account made during the year of a tax that is settled at the year-end.
IRPF and withholdingsNet income
What is left after deducting the tax-deductible expenses from the gross income of the activity, before applying any reductions.
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.