Aids and subsidies are taxed: watch out for the fine print
To benefit from aid, you have to meet the requirements and meet the conditions, but you also have to count on the fact that it is very likely that the Treasury will take part of the money
To buy a car, to undertake, to study, to rent or adapt housing, to have an income that allows you to survive… There are many grants and subsidies, but not everything is what it seems. Yes, they are necessary help and solve the problems of many citizens. However, before requesting any of them, it is important that you know that not everyone meets the requirements to request them, that you must meet conditions if you accept them and that a large part of them must be taxed, with which the Treasury will keep a percentage of the money received, when considering them capital gains.
Requirements and conditions that exclude potential beneficiaries
If you are planning to apply for a grant to change cars, to continue your business as a self-employed person or any other help for any circumstance, you should know that they are not always granted, nor indiscriminately . All of them have requirements and conditions that “are perfectly detailed in the applications,” explains lawyer Antonia Cortés. However, “many people discover it at the same time they go to ask for help,” he adds.
It should be known, for example, that to be able to aspire to be granted one of the newest aid, the Minimum Vital Income , you must be over 23 years old and under 65 (from 18 years old, if you have minors under your care), be in the situation of job seeker or have legal residence in Spain. And these are just a few of the many requirements.
Other current aids are those designed for self- employed workers . In this case, if you intend to access those granted due to cessation of activity , you will have to demonstrate, among other things, that the turnover for the third quarter was reduced by at least 75% in relation to the same period in 2019. And, in In the case of the subsidy for seasonal self-employed workers (vendors, street vendors…), the professional “has to meet numerous requirements; among others, having been registered as a self-employed worker for very specific periods of time, ”says Cortés.
There are more conditions to access a subsidy, and many have to do “with the justification that the money contributed has been used, in effect, for the purpose for which it was requested,” says José Leandro Núñez, Audens lawyer. For example, if they give you a grant to change the windows of a flat and thus improve its energy efficiency, they could ask you for information about the project, its budget, the invoices for the work or the updated energy efficiency certificate after the change of the windows ; and you would have to provide this documentation within the established deadline (which is generally three months) and following the procedure indicated, “otherwise you could lose the aid,” he says.
Also, sometimes, to obtain aid, you have to commit to making a specific expense and being registered in the RETA (Special Scheme for Self-Employed or Self-Employed Workers) for a specific time (five or six years), which delays many professionals when requesting grants. Why? Most of the time due to uncertainty, because they do not know if their project will withstand such a long term – even more so in these moments of crisis.
Aids and subsidies can be taxed to the Treasury
But one of the biggest surprises that the beneficiaries of an aid or subsidy take is knowing that they must declare to the Treasury for that aid. In effect, “most of the aid is taxed and, therefore, will affect the result of the Declaration for the following year,” says Núñez. As the Tax Agency itself clarifies , the general rule is that subsidies or aid are considered capital gains (or even income from economic activity, in the case of the self-employed), so they are taxed for income tax purposes and must be included in the Income Statement.
In practice, “they represent an increase in income, for the purposes of calculating the tax.” For example, and simplifying as much as possible according to the lawyer, if we have a net salary of 24,000 euros and we receive a subsidy of 1,000 euros, the Tax Agency will understand that we have entered 25,000 euros in that year and “will calculate the applicable fee based on that quantity ”, details Núñez. In other words, the Treasury will keep a part of the subsidy awarded, which “will vary depending on the other income we have obtained during the year.” The most typical case, the lawyer recalls, is probably “the subsidy for the purchase of a vehicle ” (what was known as Plan Renove, Plan PIVE or, more recently, Plan Moves, to which the Government intends to give a new impetus due to the drop in sales derived from the health crisis).
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