Workers may only request an increase in Personal Income Tax (IRPF) withholding once per year

Managing Personal Income Tax (IRPF) withholdings is a tool that allows workers to adjust their monthly tax burden to avoid unexpected adjustments in their tax returns. However, the Dirección General de Tributos (DGT) has delimited the conditions under which these modifications can be made.

What the DGT has ruled

After analyzing the possibility of making multiple upward modifications to the withholding rate within the same tax period, the binding body has determined the following:

• Uniqueness of the request: The worker may request a withholding rate higher than the one they are legally entitled to, but this request can only be made once during the tax year.
• Impossibility of reduction: There is no regulatory circumstance that allows for the reduction of a higher withholding rate once it has been requested within the same calendar year.
• Validity of the rate: The new applied rate will remain, at a minimum, until the end of the year and will continue in subsequent years, unless the interested party submits a written waiver or a new request for a higher rate.

What this means for you

If you are a worker wishing to increase your withholding to avoid an overpayment in your annual settlement, you must take into account that this decision is final for the remainder of the year. Once the payer applies the new percentage, you will not be able to request a decrease to return to the original rate before the end of the tax year. This implies that the choice of the new percentage must be precise, as the regulations do not contemplate the possibility of rectifying downwards within the same year.

What is advisable to do

Before submitting a request to increase withholding, it is necessary to accurately evaluate the volume of income expected for the remainder of the year. Since the modification is irreversible during the calendar year, any error in calculating the new withholding rate could result in excessive withholding that cannot be corrected until the next tax period. It is recommended to assess each particular situation to ensure that the requested adjustment aligns with the taxpayer's actual economic capacity.