The surprise in income for mutual pensioners

Compensation for excessive taxes in mutual societies is coming as a surprise to taxpayers in the income campaign.

Oliver Thansan
Oliver Thansan
14 May 2024 Tuesday 10:26
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The surprise in income for mutual pensioners

Compensation for excessive taxes in mutual societies is coming as a surprise to taxpayers in the income campaign. Because of the figures that are seen or because it was not even known directly that it was affected. The amounts reach thousands of euros, which serve to reduce the bill or change the result in favor of the taxpayer.

The origin is in contributions from current retirees to mutual societies between 1967 and 1978, the year after which they joined Social Security. Despite being contributions, they were once taxed by personal income tax as income, unlike payments to Social Security, which are deducted from our income. Since the contributions from yesteryear serve to build the pension that is collected today, and that pension is taxed again by personal income tax, the case was taken to court for possible double taxation. And this is what the Supreme Court recognized. To compensate those affected, the Tax Agency has begun to compensate them through income.

Payment to mutual societies has been seen in former telephone, banking or motor workers, but also in hardware or small health stores. “Contribution to mutual societies occurred in all sectors, in many cases the taxpayers did not even know they were doing it,” comments Xavier Masdéu, member of the board of the Associació Professional de Tècnics Tributaris de Catalunya i Balears (APttCB).

The amounts vary depending on the case, since it is closely linked to salary, contributions or age. They are specified in the tax data of each taxpayer as “adjustment for mutual societies”, a figure that is reflected negatively and can be between 500-700 euros per year or skyrocket to 2,000, depending on the cases seen by Masdéu. Carme Elena, speaker of the tax commission of the Official College of Administrative Managers of Catalonia, has found compensation of up to 12,000 euros. These sums are then applied in the declaration as a reduction on the tax base, which helps lower the tax bill or achieve a favorable result, a refund.

A problem seen in offices is that many people do not know that they are entitled to compensation. “There is a high percentage that was in mutual societies and does not know it. If they are not notified, many will not take advantage of it...”, Elena warns. For example, retirees who are not required to file the declaration and therefore do not worry about reviewing their tax data. Elena believes that the difficulties would be resolved if the Tax Agency sent a letter to those affected. “If they make the rent, it could represent a return.”

The feeling after just over a month of the campaign is that it affects more people than it seemed at first. Gestha, the union of technicians of the Ministry of Finance, estimates that it could reach 4.8 million taxpayers. The advice for everyone is to “check the tax data to see if this reduction appears.” “For those who didn't know, it's a surprise,” says Masdéu.

At the beginning of the campaign, all the data of taxpayers affected by double taxation had not yet been uploaded, so they received a notice to wait a few weeks for their calculation. Sources from the Tax Agency explain that all the calculations have already been carried out with the available data, so those retirees with mutual societies should already see a discount reflected in their tax data.

This year's declaration compensates for what was collected in the 2023 pension that was excessively taxed. To claim non-prescribed years – 2019 to 2022 – you must fill out a form that the Tax Agency has enabled, a step that is recognized as greatly facilitating the process due to the little data it requests. “It must be done before July 1 so that 2019 does not expire, so we gain a year,” warns Elena. If it is believed that contributions were made and they are not recorded, the declaration and form must be made.