Spain's tax agency delays income tax refunds, leaving taxpayers waiting

Spain's tax agency delays income tax refunds, leaving taxpayers without their money

The 2010 income tax return was filed in April and May 2011. Months later, several taxpayers were still waiting for refunds ranging from around 500 to 3,400 euros. The Agencia Tributaria (Spain's tax agency) claimed the returns were "being checked", a status that, according to several accounts, could drag on for up to six months from the last notification. The result: families who were counting on that money for Christmas were left empty-handed.

Why doesn't the tax agency pay refunds on time?

The refund process is not automatic. According to those affected, the tax agency can hold up a return if it detects that it requires additional checks: housing deductions, withholdings that don't add up, or complex income. In those cases, the six-month deadline to resolve the file starts counting from the moment the taxpayer is notified, not from when the return was filed. So a return filed in April could be resolved in February of the trinc year.

The general rule is that the tax agency has until 31 December to pay. If it doesn't, it must pay late-payment interest, which in 2011 stood at around 5%. But many taxpayers didn't know this right existed or how to claim it.

The case of the 500 euros that never arrived

One taxpayer explained that he filed his return in June and was due a refund of about 500 euros. He called his accountant, who confirmed that his file was "being checked" because of the purchase of a property. "No problem", he thought. But the months went by and the payment never arrived. "I'm short of money and I need the cash", he admitted.

Other cases involved larger amounts: 2,000, 2,400 or even 3,400 euros outstanding. The common complaint was the lack of information: "Do they have to tell me they're looking into my account?", another affected taxpayer wondered. The answer, according to the accounts, is no: the tax agency is not required to detail its checks, only to resolve within the deadline.

The strategy of delaying refunds

Several of those affected noticed a pattern: the tax agency would contact them in November or December to request documentation, just before the deadline expired. "It's a tactic to stretch the process out as long as possible", argued a taxpayer who consulted a tax adviser. Once contacted, the clock restarted and the refund slipped to February or March.

No official explanation was ever given, but the context was one of economic crisis and spending cuts. "The tax agency scrutinises everything with a fine-tooth comb to claw back money wherever it can", one participant noted. The state's lack of liquidity was a recurring rumour.

What can you do if the tax agency doesn't refund you?

The first step is to check the status of your file on the Agencia Tributaria website or call 901 12 12 24. If the deadline has passed without payment, you can claim late-payment interest, which is paid automatically. If your return is "being checked", the deadline restarts with each notification.

Some of those affected submitted letters citing the proximity of Christmas, but there is no evidence that it worked. The most effective route, according to the cases, was to keep pushing and provide the requested documentation as soon as possible.

---

The year ended without many people being paid. The average outstanding refund exceeded 1,000 euros. The tax agency had refunded 90% of returns, but the remaining 10% was left in limbo. "One more reason to cheat on your taxes", one taxpayer concluded.