Employees may deduct in their Personal Income Tax (IRPF) withholdings not applied due to payer error

In the context of managing Personal Income Tax (IRPF) withholdings, doubts arise regarding the taxpayer's responsibility when the payer does not apply the correct withholding percentage. A recent resolution from the DGT clarifies the procedure for correcting this situation in the annual tax return.

What the DGT has ruled

The DGT has determined that, in accordance with Article 99.5 of Law 35/2006, when a withholding has not been applied or is lower than what was legally required due to reasons attributable to the withholding agent, the recipient of the income has the right to deduct the amount that should have been withheld from their total tax liability.

This criterion establishes an exception to the general rule that the taxpayer must bear the consequences of insufficient withholding, provided that the responsibility for the error lies with the entity or person acting as the withholding agent. However, this possibility of deduction is not applicable when dealing with legally established remunerations paid by the public sector.

What it means for you

If you are an employee or recipient of income and have detected that your payer has not applied IRPF withholdings correctly due to an error by the company or entity, you are not obliged to permanently assume that excess tax burden. The regulations allow you to regularize that difference directly in your income tax return.

For individuals, this provides a guarantee that the withholding agent's administrative error does not result in irreversible financial loss. For companies, this criterion reinforces the importance of accuracy in payroll and payment management, as an error in withholding allows the employee to offset that amount in their annual settlement.

What you should do

In a situation of insufficient withholdings due to payer error, it is necessary to verify that the error is indeed attributable to the withholding agent and not to erroneous communication of data by the taxpayer themselves. It is recommended to compare the withholdings applied with those that legally correspond to your personal and family situation. Each case presents particularities that must be assessed to ensure that the deduction is applied correctly in the IRPF return.