Modelos 111 and 115: Spanish withholdings explained

The key idea: you declare withholdings you take from others

The most common confusion, especially among foreigners, is thinking that modelos 111 and 115 are "your" income tax. They are not. They declare retenciones: amounts you deduct from what you pay other people and pay in to the Spanish tax office on account of those people's taxes.

You apply withholdings in three typical situations:

• You pay salaries: each month you deduct your employees' IRPF (income tax) from their payslips.
• You receive an invoice from a professional (a lawyer, a designer, an advisor) that includes a retención: you pay the invoice minus that amount, and you pay the difference to the tax office on their behalf.
• You pay rent for an office or business premises: you deduct part of the rent and pay it in on account of your landlord's taxes.

The practical consequence: if you have no employees, receive no invoices with retención and rent no premises, you may never have to file either modelo 111 or modelo 115. The legal basis is Ley 35/2006 (the Spanish personal income tax law) and its regulations.

Modelo 111: payroll and invoices from professionals

Modelo 111 mainly groups two kinds of withholdings:

• Salaries: the IRPF you deduct from your employees' payslips. There is no single rate here: it depends on each employee's salary and personal and family circumstances.
• Invoices from professionals: when a professional who is an individual invoices you, the invoice includes a retención of 15 percent as a general rule, or 7 percent if they are newly self employed (during the year they start and the two following years, and they must notify you in writing).

It also covers withholdings on some less frequent payments, such as courses and conference fees. The current rates are published in the official withholding rate table of the Agencia Tributaria.

One useful nuance: invoices issued by companies (for example an SL providing you a service) do not carry this retención; invoice withholding is specific to professionals who are individuals.

Modelo 115: the rent on your business premises

Modelo 115 declares withholdings on the rent or sublease of urban property used in your business: the office, the shop, the warehouse. If you are a business or professional paying that rent, you generally deduct 19 percent of the rent (VAT excluded) and pay it in quarterly with modelo 115.

There are cases where no withholding applies. The most relevant ones:

• When the rent paid to the same landlord does not exceed 900 euros per year (VAT excluded).
• When the landlord is registered for the property rental heading of the IAE business tax and proves it with a certificate from the Agencia Tributaria (typically large professional landlords).
• When a company rents housing for its employees.

The official detail is on the AEAT page on modelos 115 and 180. And a frequent clarification: the rent on your personal home does not belong here; modelo 115 only concerns rent paid by businesses and autónomos for premises used in their activity.

Deadlines: quarterly filings plus the January summaries 190 and 180

The calendar is fixed and easy to remember:

• Quarterly returns: modelos 111 and 115 are filed from the 1st to the 20th of January, April, July and October, each covering the previous quarter. If you pay by direct debit, the window closes a few days earlier (generally on the 15th).
• Annual summaries: in January you file modelo 190 (the annual summary of the 111) and modelo 180 (the annual summary of the 115), listing the whole year person by person.

The summaries do not mean paying again: they are informative but mandatory, and the tax office cross checks them against the annual Renta returns of employees, professionals and landlords. Very large companies file the 111 and 115 monthly instead of quarterly.

If you run your books on kontora, it generates draft 111, 115, 190 and 180 filings from your payroll, incoming invoices and rent, and guides you through filing on the Agencia Tributaria website.

The flip side: when your client withholds on your invoice

If you are a self employed professional invoicing a Spanish company, the situation is reversed: your invoice carries a retención (15 percent as a general rule, 7 percent if you recently started), your client pays you the net amount, and it is the client who pays that withholding in through their own modelo 111.

That retención is not an extra cost and not lost money: it is your income tax paid in advance. In your annual Renta return it is subtracted from your final tax bill, and if too much was withheld, the tax office refunds the difference.

In addition, if at least 70 percent of your professional income in the previous year carried withholding, you are not required to file the quarterly modelo 130 prepayment (in your first year, the percentage is measured quarter by quarter). The AEAT explains this on its page about pagos fraccionados.

One important limit: the retención only applies when you invoice businesses or other professionals; invoices to private individuals carry no withholding.

Common mistakes

• Thinking the retención on your invoice is money lost. It is your income tax paid in advance and is deducted in your Renta.
• Forgetting the January summaries. Modelos 190 and 180 are mandatory even though you already paid everything quarter by quarter.
• Renting an office and never hearing about modelo 115. From the first month of rent subject to withholding, you are a withholder.
• Stopping filing without deregistering the obligation. If the census still lists you as obliged, file the corresponding nil return or update your census situation with modelo 036.
• Expecting a retención where there is none. Invoices from companies do not carry professional withholding, and neither do invoices to private individuals.

Filing late when there is tax to pay triggers surcharges that grow with the delay, so it pays to have this calendar under control from day one.

Frequently asked questions

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