Invoices and retentions for self employed??
Invoices and retentions for self employed??
Hoping David or Beach or sid can help with this...
A friend has just called me to say an SL company who is due to pay an invoice she has issued to them has said they are required by law to deduct 15% as a retention for the taxman as the taxman does not trust self employed people to pay tax each quarter. She is confused as she has never had this happen before and has simply issued invoices as normal, net amount plus IVA and then settled up each quarter with the IVA or tax. Her gestor told her to do it this way and in all her years of working as autonomo here there has not been a problem. The SL company say their gestor is correct......but they are open to correction if the relevant legislation can be produced........but their understanding is that an autonomo cannot be paid in full on an invoice and she could be in serious trouble for not using the retention system she never knew about until now.........
Can anyone advise please and also what happens re this retention system? Is the money offset each quarter or only annually.......Why is it 15% when the tax she pays on net profit left is higher than this each quarter?
If retention is the correct reply then how does she write this on the invoice? Or are 2 separate invoices issued? What kind of trouble could she be in if she has not followed this pattern in the past? She has a Hacienda certificate stating there is no tax outstanding on her account in her name which was another requirement of this SL company.
I said I would ask the source of best knowledge....here.
A friend has just called me to say an SL company who is due to pay an invoice she has issued to them has said they are required by law to deduct 15% as a retention for the taxman as the taxman does not trust self employed people to pay tax each quarter. She is confused as she has never had this happen before and has simply issued invoices as normal, net amount plus IVA and then settled up each quarter with the IVA or tax. Her gestor told her to do it this way and in all her years of working as autonomo here there has not been a problem. The SL company say their gestor is correct......but they are open to correction if the relevant legislation can be produced........but their understanding is that an autonomo cannot be paid in full on an invoice and she could be in serious trouble for not using the retention system she never knew about until now.........
Can anyone advise please and also what happens re this retention system? Is the money offset each quarter or only annually.......Why is it 15% when the tax she pays on net profit left is higher than this each quarter?
If retention is the correct reply then how does she write this on the invoice? Or are 2 separate invoices issued? What kind of trouble could she be in if she has not followed this pattern in the past? She has a Hacienda certificate stating there is no tax outstanding on her account in her name which was another requirement of this SL company.
I said I would ask the source of best knowledge....here.
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Re: Invoices and retentions for self employed??
She issues the invoice showing that the tax has been deducted in this way:
SubTotal
+IVA
=Total
-Retention IRPF 15%
=Total Factura
When she is completing her tax annual return covering the period in which the retention was made she will be issued with (or may have to ask for) a certificate from the company by whom the retention was made. The retention is then shown in box 745 of the tax return form 100 and the amount will be deducted from the total amount of tax payable.
It is the responsibility of the company to whom the invoice is issued to make the retention and declaration to AEAT.
SubTotal
+IVA
=Total
-Retention IRPF 15%
=Total Factura
When she is completing her tax annual return covering the period in which the retention was made she will be issued with (or may have to ask for) a certificate from the company by whom the retention was made. The retention is then shown in box 745 of the tax return form 100 and the amount will be deducted from the total amount of tax payable.
It is the responsibility of the company to whom the invoice is issued to make the retention and declaration to AEAT.
Let's go Brandon!
Re: Invoices and retentions for self employed??
"It is the responsibility of the company to whom the invoice is issued to make the retention "
to whom, or by whom??
to whom, or by whom??
Re: Invoices and retentions for self employed??
Thanks Beach - So are you saying the SL company is correct? If so..............
How is this fair? She pays tax and IVA every quarter but now, apparently, she has to lose 15% of her income until next July effectively, almost a year away as the quarterly tax payments will not be adjusted to a lesser percentage, plus her tax affairs and rebate being accurate is then dependent on another company´s efficiency! This is hardly respecting non discrimination in the workplace is it? For that quarter its thus really 35% lost in tax from net profits.................higher than her tax threshold as she normally gets a rebate or only pays a tiny amount each year apparently.
How can her accounting package now be accurate if some of the money has been diverted away before it got to her - does she declare this as part of her income on the quarterly return so its the total amount of the invoice including the retained amount or less the retained amount? If the former then of course she is paying tax on money already taken away by the taxman, more of her money on interest free loan to Hacienda, for nearly a year........
Where do the retained monies go - to the taxman now or does the SL company keep them? If the latter what happens if the SL disappears as so many have done in 2008? Her money goes with it and she cannot get a rebate?
Boy, the more I write about this the more my blood is boiling at the effrontery and injustice of it.........it seems to be a set up fraught with potential problems, unnecessarily complicated and plain dis-respectful to self employed people.......any ideas why it is being enforced now when it never was before and she never even knew about it?
How is this fair? She pays tax and IVA every quarter but now, apparently, she has to lose 15% of her income until next July effectively, almost a year away as the quarterly tax payments will not be adjusted to a lesser percentage, plus her tax affairs and rebate being accurate is then dependent on another company´s efficiency! This is hardly respecting non discrimination in the workplace is it? For that quarter its thus really 35% lost in tax from net profits.................higher than her tax threshold as she normally gets a rebate or only pays a tiny amount each year apparently.
How can her accounting package now be accurate if some of the money has been diverted away before it got to her - does she declare this as part of her income on the quarterly return so its the total amount of the invoice including the retained amount or less the retained amount? If the former then of course she is paying tax on money already taken away by the taxman, more of her money on interest free loan to Hacienda, for nearly a year........
Where do the retained monies go - to the taxman now or does the SL company keep them? If the latter what happens if the SL disappears as so many have done in 2008? Her money goes with it and she cannot get a rebate?
Boy, the more I write about this the more my blood is boiling at the effrontery and injustice of it.........it seems to be a set up fraught with potential problems, unnecessarily complicated and plain dis-respectful to self employed people.......any ideas why it is being enforced now when it never was before and she never even knew about it?
Re: Invoices and retentions for self employed??
Jool, you nedd one of your anti stress sessions !!
it´s no "injustice and effrontery", it´s the system here, that´s the way it works here, if the law says it has to be done that way then that´s the way it should be done.
it´s no "injustice and effrontery", it´s the system here, that´s the way it works here, if the law says it has to be done that way then that´s the way it should be done.
Re: Invoices and retentions for self employed??
But IS it the law here? If so how can her gestor and Hacienda accept it a different way for many years up to now without any problem whatsoever? Apparently she was paid by lots of different SL companies before without this happening. Do you have a link to the law?
I am not stressed but as I was writing it then it seemed grossly unfair and discriminatory to me..........unlike you I can see flaws in Spain and spanish ways much as I love living here, I´m certainly not suggesting non compliance with the law more really trying to clarify what the law actually says. I know lots of self employed people and none of them have ever had to do this, rental agents have done so for rental properties but not any other category I know of.
I am not stressed but as I was writing it then it seemed grossly unfair and discriminatory to me..........unlike you I can see flaws in Spain and spanish ways much as I love living here, I´m certainly not suggesting non compliance with the law more really trying to clarify what the law actually says. I know lots of self employed people and none of them have ever had to do this, rental agents have done so for rental properties but not any other category I know of.
Re: Invoices and retentions for self employed??
I can also see flaws in spain and the spanish ways, but I accept that they have to be complied with and respected if I choose to live here, and I don´t let them wind me up, that is one of the things I have learnt and changed over the years, when I first came here I also got stressed out about these things, but luckily I have learnt (from the spanish and the spanish ways) that there is no need, and no advantage to getting stressed out over these things, hiccups are more difficult to overcame when one is stressed out
no we´ll have half an hour of slow ,steady breathing listening to some nice music to get back to our calm selves
no we´ll have half an hour of slow ,steady breathing listening to some nice music to get back to our calm selves
Re: Invoices and retentions for self employed??
Hi Julian,
I agree with you, but how do you find out exactly what the law is when there are so many discrepancies? How can anyone be running their business quite happily, believing it to be in a totally legal way for many years and then suddenly a curve ball like this changes everything? Are you saying you already knew this? Why can´t Hacienda just send out a letter explaining all this when people first register as autonomo? Or give it to you when you first register on the system? Will my friend be in trouble for having applied an incorrect system all these years and if so what happens to her now?
As you know I have been self employed myself for several years here and I was unaware of this apparent difference in the law..........this is why I was asked and I came here for answers.
I agree with you, but how do you find out exactly what the law is when there are so many discrepancies? How can anyone be running their business quite happily, believing it to be in a totally legal way for many years and then suddenly a curve ball like this changes everything? Are you saying you already knew this? Why can´t Hacienda just send out a letter explaining all this when people first register as autonomo? Or give it to you when you first register on the system? Will my friend be in trouble for having applied an incorrect system all these years and if so what happens to her now?
As you know I have been self employed myself for several years here and I was unaware of this apparent difference in the law..........this is why I was asked and I came here for answers.
Re: Invoices and retentions for self employed??
I´ve used the same asesor fiscal (spanish)for many years,he does all my paperwork, and he informs me of any changes etc.
I´ve not had any problems, once or twice I´ve received some notification from hacienda which I take to the asesor and he goes and sorts it out !!
strangely enough although each time I see him ask him what I owe him it´s now two or three years since he charged me anything !!! I´m not changing asesor !!
I´ve not had any problems, once or twice I´ve received some notification from hacienda which I take to the asesor and he goes and sorts it out !!
strangely enough although each time I see him ask him what I owe him it´s now two or three years since he charged me anything !!! I´m not changing asesor !!
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Re: Invoices and retentions for self employed??
Hi,
I am autonomo and have been for some years.... I get fed up with people always asking... "Do I have to pay the IVA?"..... Yes, you pay the Iva.... It is a s simple as that and that is how i work... You dont want to pay correctly then go find a cowboy and call me later to fix what he broke....
A few months ago someone told me they wanted the 15 percent off for retention.... I said if you want me to work then you get an invoice including Iva at the correct amount or go find someone else... I guess it depends on how much you need the work and cash....
I am tired of self employed people being called thieves and wise boys who avoid tax... Its crap that we get penalised before we even start.... That two hundred odd euros a month for SS is hard to find and the system needs to be changed to help the entrepreneurs here in Spain to succeeed.... Jeez I have 3 altas for my different jobs and put my accounts on the dot every three months.... I don?t need some company trying to screw me over for 15 percent so they keep the cash in thier bank account longer...
I say tell them to pay and have some damned pride and respect for the person working for them.
I am autonomo and have been for some years.... I get fed up with people always asking... "Do I have to pay the IVA?"..... Yes, you pay the Iva.... It is a s simple as that and that is how i work... You dont want to pay correctly then go find a cowboy and call me later to fix what he broke....
A few months ago someone told me they wanted the 15 percent off for retention.... I said if you want me to work then you get an invoice including Iva at the correct amount or go find someone else... I guess it depends on how much you need the work and cash....
I am tired of self employed people being called thieves and wise boys who avoid tax... Its crap that we get penalised before we even start.... That two hundred odd euros a month for SS is hard to find and the system needs to be changed to help the entrepreneurs here in Spain to succeeed.... Jeez I have 3 altas for my different jobs and put my accounts on the dot every three months.... I don?t need some company trying to screw me over for 15 percent so they keep the cash in thier bank account longer...
I say tell them to pay and have some damned pride and respect for the person working for them.
Re: Invoices and retentions for self employed??
Wow wildside you live up to your name, I too am self employed and feel the same as you, we are treated as thieves and lesser beings for not being an SL yet often it is the directors of an SL who really abuse the system, what use is 3k as a sign of funds for goodness sake......
So it seems that this retention is kind of optional but still I don´t really know what the actual letter of the law says or have any Hacienda reference - David and Sid where are you.....and Beach and Julian imply the SL company is correct in fact....
DUH
So it seems that this retention is kind of optional but still I don´t really know what the actual letter of the law says or have any Hacienda reference - David and Sid where are you.....and Beach and Julian imply the SL company is correct in fact....
DUH
Re: Invoices and retentions for self employed??
I´m not implying anything, just saying that whetever the law says, then that´s the way it has to be.
I get paid a rent on al local I own, and 18% of the rent is kept each month by the guy renting it from me, and he is responsible for paying that retencion to hacienda later.
if it´s 18% for this retencion, it may well be for the same for the invoices
it used to be 15%
I don´t resent the deduction, at the end of the day it´s all the same, and it´s the way the taxman of the country I choose to live in says it has to be done.
I get paid a rent on al local I own, and 18% of the rent is kept each month by the guy renting it from me, and he is responsible for paying that retencion to hacienda later.
if it´s 18% for this retencion, it may well be for the same for the invoices
it used to be 15%
I don´t resent the deduction, at the end of the day it´s all the same, and it´s the way the taxman of the country I choose to live in says it has to be done.
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Re: Invoices and retentions for self employed??
@julian,
Thats my point.... if I owned a local and the renter told me they wanted a retention I would tell them no, go find somewhere else to rent...... I don't believe that this is the law for them to DEMAND a retention but I think it is the lawyer moderator of this board that needs to clarify this from a legal point of view...... I supply a service and apply the iva rate set to that service... Sorry I want my money+Iva and I place it in my accounts.. I give an oficial factura for all my work and place my accounts properly each quarter...
jeez, every shop I go to has Iva on the factura.... I wish i could cadge 15 percent off all of them because I want a retention.... Can you imaginr?... yeh sure they'd say whilst hitting the intercom and calling for security.!
Thats my point.... if I owned a local and the renter told me they wanted a retention I would tell them no, go find somewhere else to rent...... I don't believe that this is the law for them to DEMAND a retention but I think it is the lawyer moderator of this board that needs to clarify this from a legal point of view...... I supply a service and apply the iva rate set to that service... Sorry I want my money+Iva and I place it in my accounts.. I give an oficial factura for all my work and place my accounts properly each quarter...
jeez, every shop I go to has Iva on the factura.... I wish i could cadge 15 percent off all of them because I want a retention.... Can you imaginr?... yeh sure they'd say whilst hitting the intercom and calling for security.!
Re: Invoices and retentions for self employed??
the guy cannot CHOOSE, he MUST retain 18% and pay it to hacienda, if he goes to look for another local he MUST do the same thing.
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Re: Invoices and retentions for self employed??
Can anyone show me the law on this from the hacienda or wherever... Just post a link... Spanish or English language, but others seem to know about this and I am willing to learn.
It is interesting that when I told the person (in my case) to go away they came back a few week later and we worked to my terms... When I asked my asesor he said that I was right to stick to my way as the other was not obligatory....
It is interesting that when I told the person (in my case) to go away they came back a few week later and we worked to my terms... When I asked my asesor he said that I was right to stick to my way as the other was not obligatory....
Re: Invoices and retentions for self employed??
Remember we are talling about 2 different retencions here, one is an invoice for professional work , another is for receiving rent.
Re: Invoices and retentions for self employed??
Yes this is true but the apparent and practised flexibility, whether legal or not, adds to the confusion, I too would like clarity and to know the relevant law as it seems I may have been practising illegally as well if the SL company for my friend is correct...........
Is all this info in David Searl´s book I wonder? Does anyone know if there is a 2009-10 edition due soon......?
I know and appreciate we live in spain but any country that expects you to understand and abide by rules/laws they do not inform you about seems somewhat suspect to me, especially when it would be so easy to issue this info...
"Registering as autonomo?
OK sign here to show you have read and understand these rules about your accounting and tax procedures, oh you don´t like them....why not register in this way and then you can have a better accou7nting system more suited to your needs, EU style....as practised by other member countries"
Job done in a fair manner
The current system punishes you for not knowing what no one ever told you even when you asked what the procedures were and that as you did not even know about anything like it existing you did not think to ask - if you get my drift?
Is all this info in David Searl´s book I wonder? Does anyone know if there is a 2009-10 edition due soon......?
I know and appreciate we live in spain but any country that expects you to understand and abide by rules/laws they do not inform you about seems somewhat suspect to me, especially when it would be so easy to issue this info...
"Registering as autonomo?
OK sign here to show you have read and understand these rules about your accounting and tax procedures, oh you don´t like them....why not register in this way and then you can have a better accou7nting system more suited to your needs, EU style....as practised by other member countries"
Job done in a fair manner
The current system punishes you for not knowing what no one ever told you even when you asked what the procedures were and that as you did not even know about anything like it existing you did not think to ask - if you get my drift?
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Re: Invoices and retentions for self employed??
So, let me get this straight.... You are saying that your accountant is great and knows his stuff but you haven't had to pay him at all for "two or three years"... Is it two, or, three years? My he must be a great accountant for your business dealings... Sorry, no offence meant but you got to admit it is just a little bit comedic..... Have you checked your bank account lately? Any small discrepencies?I´ve used the same asesor fiscal (spanish)for many years,he does all my paperwork, and he informs me of any changes etc.
I´ve not had any problems, once or twice I´ve received some notification from hacienda which I take to the asesor and he goes and sorts it out !!
strangely enough although each time I see him ask him what I owe him it´s now two or three years since he charged me anything !!! I´m not changing asesor !!
Re: Invoices and retentions for self employed??
probably at least 3 years, despite asking him everytime we see him what we owe him...it´s become a bit of a standing joke, i think he´s too embarressed now to ask for his fees ! I guess he thinks he´ll wait till he does the paperwork for a sale for us and then ask for something when he sees us receiving a cheque from someone!!!
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Re: Invoices and retentions for self employed??
I would be terribly afraid...... very very terribly afraid that I owed someone for three years work.... Just wait till you get the factura.... hahahah you can sing as loud as you like about yout "retention" but he will probably have your house, car, bicycle and last packet of cornflakes off you....Do you have a wife? yes her too and probably the rest of any family as well.... It's like that here.... Don't get stressed about it... just deal with it and stay cool... Its just the laws of the country you are a "guest" in for a bit...
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