Tax treatment of subsidy repayments under the modules regime

The treatment of subsidies in Personal Income Tax (IRPF) generates recurring doubts, especially regarding taxpayers who file under the objective estimation regime, commonly known as modules. A recent binding ruling from the Dirección General de Tributos (DGT) has clarified the correct procedure regarding the repayment of such aid.

What the DGT has ruled

The issue focuses on how a taxpayer should proceed in their IRPF return when they must repay a subsidy previously received for hiring personnel. The DGT has determined that the subsidy received for this purpose constitutes a current subsidy.

According to the Administration's criteria, this type of aid must be recognized at the time the definitive grant is awarded. Since the taxpayer applied the regulations to increase their net income under the modules regime upon receiving the aid, the repayment of said aid must have the opposite effect. Therefore, the repayment must reduce the net income under the modules regime in the tax period in which the repayment is made.

What this means for you

If you are a self-employed worker taxed under objective estimation and you have received a subsidy that you subsequently had to repay, you cannot treat this movement in isolation or in a tax year different from the one in which the actual repayment occurs.

The applicable regulations, which include the IRPF Law, the Corporate Tax Law, and Order HAC/1155/2020, establish a direct correlation between income and expense. If the subsidy increased your income at the time, its repayment must act as a reduction of said income in the fiscal year in which the disbursement is made.

What you should do

In a situation involving the repayment of public aid, it is necessary to verify the fiscal year in which the cash movement occurs and the resolution that mandates the reimbursement. It is essential to ensure that the reduction of the net income under the modules regime is correctly reflected in the corresponding tax return to avoid discrepancies with the Tax Agency. It is recommended to assess each particular situation to determine the exact timing of the imputation based on the definitive granting of the aid.