Withholdings – Tax Form 111

Tax Form 111 is a quarterly form made by the Corporations that have made withholdings during the quarter.

Withholdings will apply in the following scenarios:

Labour income like, for instance, employees paychecks.

Economical activities income like, for example, building professionals, legal professionals, etc.

Gambling prizes, contests prizes, etc.

Forest exploitation.

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Relating to the labour income, the clearest example would be the worker's payroll’s IRPF withholdings, which have to be declared quarterly on the Tax Form 111.

In the case of the economical activities income, they are invoices issued by a self-employed professional included in sections II and III of the Economical Activities Tax (also known as IAE), like architects or notaries, for instance.

On the gambling or contest prizes, the withholding will change based on the amount of the prize won. Unlike the VAT Tax form (Mod. 303), is a tax withheld and deposited in the Inland Revenue by the receiver of the invoice and not the issuer.

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In the Labour Income scenario, as payrolls or settlements, it would be the total amount withheld from the employees during the quarter, distinguishing both salaries in cash and salaries in kind.

In the Economical Activities scenario, the withhold applied is 7% during the 1st year and the following 2 years, for the new self-employees professionals

Beyond that point, withhold will rise to 15%, which is the general one.

It is important the Tax Form 111 presentation because in case it does not get presented, the Inland Revenue will search for responsibilities on the Corporation who has not made the payment, including sanctions and penalties.

This Tax Form will be issued during the first 20 days of April, July, October and January.