In which cases can a self-employed person benefit from reduced income tax of 7%?

In general, any self-employed person must apply 15% of personal income tax on invoices issued, but those who have registered for the first time have the possibility of benefiting from a 7% reduction, provided that certain conditions are met.

For how long can this reduction be applied?

It can be applied during the year that the self-employed person registers, until December 31 and the following two full years.

What requirements are necessary to benefit from this measure?

  • Not having been registered in an economic activity during the previous year.
  • It only applies to the self-employed who register for the first time in this scheme or to those who have not developed an activity during the last year.

Should they reflect this reduction on their bills?

  • They must inform all customers who are obliged to retain that they are applying this reduced percentage to their invoices.
  • They must send their identification data, the date of registration of the activity to be able to justify that they are a new self-employed and the time during which the reduced retention will be applied.

Is it convenient to always apply this reduction?

Although you are entitled to this bonus, there is no obligation to apply reduced income tax. Everything will depend on assessing whether or not it compensates to avail itself of it.

If the income forecast is high, it is not recommended to apply the reduced income tax. Since it is an amount that is anticipated to the Treasury, if it is not paid before for the proceeds, it will end up being paid after accumulated.

What other aspects must be taken into account?

  • It must be borne in mind that this reduction is only for self-employed professionals who carry out activities individually.
  • When an invoice is made to a private client, we must not include personal income tax, since they do not present this type of withholding in their tax return and, therefore, the only thing that needs to be reflected is VAT. Consequently, to include personal income tax on the invoice, the recipient must be another self-employed person or company.
  • If more than 70% of the total income is subject to withholding, there is no obligation to present the quarterly settlement of the installment payment of personal income tax (model 130).

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