Most people’s initial reaction to receiving any type of official notification is to panic. Others opt to bury their heads in the sand like an ostrich, hoping the situation will “resolve itself”. Both responses are a mistake! Of course it is rare the Tax Office will ever take the time to write to congratulate you on a job well done or to thank you for the taxes you’ve paid diligently every quarter over the past decade but before you go to panic stations, read through the document carefully because many times the Tax Office simply needs to confirm information filed on a declaration and the purpose of the notification does not necessarily result in any form of payment or penalty.
Types of notifications:
1. Informative: These do not require any type of intervention on the recipient’s part; however, the Tax Office requires confirmation the document has been correctly received which is why they are sent via certified post. If the letter is not signed for, they will publish it in the State Bulletin and from there it is considered to be properly received.
2. Verification: To confirm information included in a tax declaration and since this information must be clarified, a response is required.
3. Collection Proceedings: Issued if the taxpayer has an outstanding debt. Extra charges apply for late payment, however, these may be reduced if paid within the deadline shown in the notification.
4. Embargo: If the steps outlined in the Collection Proceedings are not followed, the Tax Office proceeds to retrieve any outstanding debts directly from the interested party’s bank account or other methods.
5. Tax Inspection: These notifications go into scary town and mean the Tax Office is going to review all information they have on-file on the person. It could be a standard inspection, or it could be they have specific queries that must be resolved.
6. Disciplinary Proceedings: This is the Tax Office’s final recourse and it means they have concluded unequivocally the taxpayer has not complied with tax law. Again, another proceeding can be initiated if the taxpayer feels the tax office has made a mistake, however, if they do not agree, the amounts they demand must be paid to close the proceedings.
How to respond?:
Every notification sent includes instructions regarding the method the taxpayer must follow to respond correctly. Normally there is a ten-day period (excluding the weekend and bank holidays) by which the taxpayer must formally reply and obviously, it is best to respond within that deadline.
Remember, the Tax Office may not have all the facts so their initial interpretation of the information received is not definitive and by law, they must allow the interested party opportunity to clarify the data. If the recipient of the notification agrees with its content, they must sign and return the enclosed form to that effect. If, however, to the contrary, the recipient is not in agreement with the Tax Office’s assessment, they may respond with an appeal stating their case and providing any supporting documents that prove their statements.
If the taxpayer requires more time to gather the necessary paperwork in order to respond to the notification, an extension can be requested to increase the ten-day deadline as long as the criteria for the extension is met. As you can imagine, this process is not always simple and the Tax Office may not grant an extension so this course of action should only be taken in extreme cases and it is preferable to ensure a proper response is submitted within the deadline stipulated in the letter to avoid any complications.
After deciding what to respond, the recipient of the notification must decide how to inform the Tax Office. By this, I mean, the taxpayer must ensure the Tax Office receives the response in a clear and timely manner to prevent further investigation into the matter. A response may be presented in paper form, a hard copy that is taken directly to the nearest Tax Office and registered into the system. Two copies must be taken; one for the Tax Office and one for the taxpayer that must be stamped and dated to confirm when it was delivered. The other method is via their online platform, but this is only accessible if the interested party has a verified digital certificate or another means of access to their system.
The next step: If the Tax Office receives a response within the deadline, they review the declaration made along with any supporting documents, and from there they draw their conclusions and issue another notification. This notification may be favourable, they are happy with the evidence provided and confirm the file has been closed or they are not satisfied with the explanation and they proceed to inform the taxpayer of the next phase of the process. If they have detected what they consider fraudulent declarations, the result could be that any tax relief obtained is dismissed, meaning the difference must be paid or there could be a penalty to pay for filing declarations outside the proper period.
Whatever the outcome, the taxpayer still has an opportunity to state their case if the Tax Office has not responded in their favour and they feel their assessment of the facts is incorrect. Each time responses go back and forth between the taxpayer and the Tax Office, the file is escalated to another level, so it is imperative the taxpayer knows what they are doing, because the procedures get more and more complicated.
The language used in these notifications is not usually easy to understand, even for Spanish nationals so if you receive one, it is advisable you have a professional verify exactly what it is about and what needs to be done and to prevent the situation from worsening because of a misunderstanding or simply because the taxpayer fails to respond in a timely manner. Officials at the Tax Office can provide further information about the situation but if you do not understand sufficient Spanish, this may not prove very useful and protocols must still be followed to respond properly.
It is possible to advise the Tax Office if the taxpayer is unavailable to receive notifications, if they are going to be away on holiday for example and in this way, they hold off sending notifications for a limited period of time but it means deadlines can be properly met. I always recommend dating the notification so there is no doubt about when it was received.
Whatever the case, the “ostrich approach” is never an option. The Tax Office may be understaffed but it never forgets, however scary it may be to receive an official notification, it is far worse to ignore it as the problem needs to be tackled head on.