Law 11/2021 of July 9 establishes a new framework for reducing tax penalties, under which penalties are reduced if payment is made during the voluntary payment period and the taxpayer agrees to the terms.
Reduction of Tax Penalties Effective July 11, 2021
Therefore, and pursuant to the new Article 188 of the General Tax Law currently in effect, the reduction applicable for paying penalties within the voluntary payment period and without filing an appeal against them is increased from 25% to 40%.
Through July 11, 2021
If a taxpayer was subject to a tax adjustment that was not appealed (for example, a provisional personal income tax assessment), the applicable penalty was reduced by 30% of its amount. Furthermore, if the taxpayer did not appeal the penalty and paid the amount on time (or deferred payment and provided a bank guarantee), they were entitled to an additional 25% reduction on the already reduced amount.
Since July 11, 2021
This second reduction has increased from 25% to 40%. The aim is to encourage more taxpayers to accept the penalties and pay them promptly, thereby increasing tax revenue.
Example of a Reduction in Tax Penalties
A taxpayer undergoes a tax audit, signs an acceptance statement, and is assessed a penalty of 50,000 euros:
Transitional Provisions
Penalties agreed upon before July 11 that had not yet become final as of that date will also be eligible for the 40% reduction.
It should also be noted that the penalty is similarly reduced in cases where inspection reports are signed “by mutual agreement,” a new provision set forth in Article 188(1)(a) of the General Tax Law (LGT), under which the reduction in the tax penalty increases from 50% to 65%.
With all of this in mind, the government aims to prevent litigation and appeals against penalties, provisional assessments, or inspection reports, in order to avoid overburdening the Tax Agency and the economic-administrative courts.
Our Tax Advisory Department can help you with this and other matters. Please contact us. At Carrillo Asesores, we’d be happy to assist you.
