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Practical manual for Income Tax 2020.

2. Waiver of the application of the objective estimation regime and the special simplified regime of VAT or IGIC

Express resignation

Regulations: Articles 33.1 a) and 4 Regulation IRPF . See also article 5 of Order HAC /1164/2019, of November 22 ( BOE of the 30th) and article 10 of Royal Decree-Law 15/2020, of April 21, on urgent complementary measures to support the economy and employment ( BOE of the 22nd)

The express waiver of both the objective estimation method and the special simplified and agriculture, livestock and fishing regimes of VAT or simplified and of agriculture and livestock of IGIC , must be carried out, as a general rule, in the month of December prior to the beginning of the calendar year in which it must take effect.

However, exceptionally for the year 2020 the following measures have been adopted with respect to the express waiver of the objective estimation method:

  • Initially, the first transitional provision of Royal Decree-Law 18/2019, of December 27, which adopts certain measures in tax, land registry and social security matters ( BOE of the 28th), allowed exercising the waiver or revocation of the waiver until January 30, 2020. However, resignations or revocations submitted for the year 2020, during the month of December 2019 are understood to have been submitted during the valid period.

  • However, after the declaration of the state of alarm due to Covid-19 article 10 of Royal Decree-Law 15/2020, of 21 April, of urgent complementary measures to support the economy and employment (BOE of 22), to make the regime for SMEs and the self-employed more flexible, adapting it to the real situation of economic activity caused by the health emergency, allowed the waiver of the estimation method to be exercised objective in personal income tax and/or special simplified regime in VAT in fiscal year 2020 without being subject to the 3-year period, so that taxpayers can reapply said method in fiscal year 2021, always that meet the regulatory requirements for their application.

    To do so, taxpayers could waive the objective estimation method by submitting the split payment corresponding to the first quarter of 2020 in accordance with the direct estimation method (i.e., by submitting Form 130 instead of Form 131).

    In this case, they pay taxes in 2020 using the direct estimation method. Additionally, for the year 2021, it has been exceptionally established that they can return to paying taxes under the objective estimation regime provided that they meet the requirements for its application, revoking the previous waiver during the month of December 2020 or by submitting on time the declaration corresponding to the fractional payment of the first quarter of the fiscal year 2021 in the manner provided for the objective estimation method. 

    Article 10.1 of Royal Decree-Law 35/2020, of December 22, on urgent measures to support the tourism, hospitality and commerce sectors and in tax matters (BOE of the 23rd), also provides for the waiver of the application of the objective estimation method for the year 2021, which is not binding for 2022 either.

In the event of starting business activity, the waiver will be made when the tax register declaration for the start of activity is filed.

The resignation must be submitted using form 036 for the census declaration of registration, modification and deregistration in the Census of entrepreneurs, professionals and withholding agents or form 037 for the simplified census declaration of registration, modification and deregistration in the aforementioned Census of entrepreneurs, professionals and withholding agents, approved by Order EHA /1274/2007, dated April 26.

Tacit resignation

Regulations: Art. 33.1 b) Regulation Income Tax

The objective estimation method is also deemed to have been waived by submitting within the statutory period (until April 20) the declaration corresponding to the fractional payment of the first quarter of the calendar year in which it must take effect in the manner provided for the direct estimation method.

In the case of starting business activity, the waiver will be understood to have been made when the instalment payment is made corresponding to the first quarter of the financial year within the regulatory period and in the manner provided for the direct assessment method.

Consequences of resignation

Regulations: Articles 33.2 and 3 Regulation IRPF

The waiver of the objective estimation method in relation to any activity means, for the purposes of Personal Income Tax , that the taxpayer is compulsorily subject to the direct estimation method, in the corresponding modality, to determine the net income of all the activities carried out, for a minimum period of three years.

Covid-19: However, for the year 2020, as a consequence of Covid-19, the exceptional waiver of the objective estimation method has been permitted, eliminating the mandatory link to the three-year period, so that in 2021 the taxpayer who has waived it, in accordance with the provisions of article 10 of Royal Decree-Law 15/2020, may return to paying taxes using the objective estimation method provided they meet the requirements for its application, revoking the previous waiver.

After this period, it will be understood to be tacitly extended for each of the following years in which the objective estimation method could be applicable, unless the waiver is formally revoked in the month of December prior to the start of the calendar year in which it must take effect.

In any case, if in the year immediately prior to the year in which the waiver of the objective assessment method is to take effect, the limits that determine its scope of application will be exceeded, this waiver will be deemed not filed.