The Spanish Tax Agency to give back the charged income tax on maternity leave

Madrid’s High Court contradict the Spanish tax authority’s criteria and it recognizes the refund of income taxes paid on maternity leave.

The Community of Madrid’s High Court of Justice (TSJM) has recognized to a taxpayer the income tax’s refund paid when receiving a maternity allowance.

This judgment contradicts the Spanish Tax Agency’s on this subject criteria, who considered this allowance as an income and, because of that, liable to be taxed by income tax. This case’s juridical base is on the Article 7.h of IRPF Law’s interpretation.

Although this decision is solely specific to this judged case, it does open the door to the rest of sufferers (since January 2012) to success when claiming the IRPF’s payback for the maternity leave by presenting to the Tax Agency an IRPF’s correction of self-assessment.

Regarding this matter, the taxpayer applied for €3.135’s payback that she had paid on IRPF when she received a maternity allowance worth €11.679. The Spanish Tax Agency had denied this application in 2014.

In fact, a year after, the Spanish tax authority had to release an information note clarifying that maternity allowances were not exempt from taxation. It has been calculated that in the case that this judgment would have forced the tax office to give the IRPF’s amount back, the Spanish Tax Agency should disburse around €1.3bn to more than one million of beneficiaries.

However, the Spanish Tax Agency will keep asking for the IRPF on maternity leave despite this decision. To avoid the fine, it is recommended to pay said IRPF and, after that, applying for the money’s payback. After the likely denial, it is in that moment when the process can be started, both administrative and judicial, at the Economic and Administrative Tribunal (and, later to the regional High Court) to be given back what was paid on income tax.

Besides, if the TSJM’s interpretation about this case, would be extended, not only maternity allowance would be exempted, but also the birth and childbirth’s  allowances, the child and orphan’s benefit or even the parental allowance because those subsidies would be framework in the general regime.

Thus, and summing it up, the Spanish Social Security spends €1.60bn yearly in maternity allowances, while the Tax office collects on those subsidies’ IRPF around €256m a year.

At Del Canto Chambers we are specialized in tax law, including the Spanish Tax Agency’s taxation procedures’ management, and in trade law. We can be contacted at clerk@delcantochambers.com

Del Canto Chambers’ Editorial Board

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