I am in ERTE, how does it affect me in the 2022 Income Statement?


Spain closed the year 2022 with almost 17,700 workers in ERTE (Temporary Employment Regulation File), according to the latest data published by the Social Security. It is a mechanism that companies can resort to for economic, technical, organizational and production reasons or due to force majeure -during the Covid-19 pandemic it was widely used-.

Companies can apply the temporary suspension of the contract of work of its workers or the reduction of the working day of workers, that is, it affects the salary of employees and, therefore, the income for which they will have to pay taxes in the Income Statement for the year in which it was applied. This year -starting in April- the 2022 Income Statement will be made.

With regard to the Treasury, there is a distinction depending on the option adopted by the company. In the case of a full-time ERTE, employees will receive the benefit entirely from the Public State Employment Service (SEPE). On the contrary, if the company applies to its workers a reduction in working hours, the company will continue to pay a part of his salary, but another is the responsibility of SEPE.

One or two payers in the Income statement

The ministry directed by María Jesús Montero consider SEPE one more payer. In this way, one of the consequences for workers in partial ERTE is that they already have two payers and the limit that obliges them to present the Income statement is reduced.

Specifically, this year the Tax Agency will require it to be delivered to all taxpayers who have obtained over 15,000 euros from two or more payers. However, the Personal Income Tax Law (IRPF) establishes that the limit will be 22,000 euros, when the taxpayer has not received more than 1,500 euros per year from the second and other payers -in order of amount- set.

withholdings applied

On the other hand, it is necessary to take into account the withholdings applied, which is key to determining the result of the Income statement. This is a procedure to adjust the personal income tax that corresponds to each taxpayer. Payers apply a withholding according to the personal and family conditions of the worker and this withholding is adjusted with the declaration according to the deductions and reductions recognized by the Treasury.

The result of the declaration can be greater, less or equal to all the withholdings applied to the income obtained by the taxpayer throughout the year for which it is taxed. Depending on the difference, the statement will be paid, returned or unchanged for the taxpayer.

As explained by the SEPE, in unemployment benefits withholding of Personal Income Tax (IRPF) is applied because they are considered as a income subject to tax according to tax legislation. However, in some cases the withholding may be zero because the expected amount does not reach the mandatory minimum.

Specifically, from the State Public Employment Service they explain that “due to the very dynamics of the payment of benefits in periods of suspension of labor relations due to the procedure of temporary employment regulation, the withholding on account for personal income tax is unlikely, if the expected benefit amounts do not reach the mandatory minimum required by the tax regulations for the application of that one”.

Even so, If the worker considers it, they can request withholding or increase the percentage withheld on account of personal income tax. The type of withholding varies according to the total amount that you will receive as unemployment benefits expected for the calendar year and according to personal and family circumstances.

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