Maternity exemption from personal income tax
Those people who received maternity / paternity benefits in non-prescribed exercises can apply for ...
The Contentious-Administrative Chamber, Second Section of the Supreme Court, in Sentence number 1462/2018 concludes that public maternity benefits received from Social Security are exempt from Personal Income Tax.
What does this sentence imply from a tax point of view?
Fundamentally, it implies that all those people who have received benefits from the INSS in 2014, 2015, 2016 and 2017 for having been on maternity / paternity leave may have the right to have the AEAT return the amounts unduly paid in those years as consequence of not having applied the aforementioned exemption.
Therefore, it is essential to recalculate the income statement for the years in question (only in which the aforementioned benefit has been received) in order to determine if there has been undue income (either due to having paid more the one that corresponded either to having received less refund).
* It should be noted that those taxpayers whose return turned out to be returned for the total withholdings made do not have to request any rectification as there is no further refund.
* Likewise, taxpayers who received this benefit in years prior to 2014 must ensure that they have not subsequently submitted supplementary returns for the years in question that have broken the prescription. By way of example, a person who received the benefit in 2012 and who in 2015 presented a supplementary declaration to that of 2012 for having received arrears, would have the right to request the rectification of the 2012 declaration as it is not prescribed as a consequence of the fact that the 2012 declaration broke its prescription in 2015 so that until 2019 it could be rectified.
HOW TO REQUEST RECTIFICATION?
We will establish a procedure for rectification and return of undue income. In this procedure we will eliminate the benefit received from the work income. This will mean a decrease in the General Payable Base, which in most cases will mean a right to receive a refund of undue income plus the corresponding default interest. The amount of the installment to be returned will depend fundamentally on the amount received as a benefit and the average tax rate applied.