Tax Year 2020 De-brief
2020 is coming to an end, and in many countries, the tax year also coincides with the end of the year.
In order to give you a little peace of mind from this tumultuous year, we’ve compiled a guide to help make sure that you stay in compliance with the following countries: China, France, Germany, and Spain. This guide will give you some insight on what you as either an employer need to file when it comes to your employees or as an individual and what you need to file for your income tax returns.
In China, the tax year ends on December 31, 2020. Tax declarations must be made by March 31, 2021.
In China, Individual Income Tax (IIT) and Social Insurance are paid to the proper authorities on a monthly basis through payroll. Tax payments are due on the 15thof the following month, however, when there are exceptions (i.e. a public holiday), the tax authority will publish the payment date.
The employee must submit an annual IIT self-declaration form by March 31, 2021, when at least one of the following criteria are met:
- The individual’s annual income exceeds 120,000 RMB (excluding those who have no residence in China or those who have resided within China for less than one year in the tax year)
- The individual receives income from more than 2 sources in China, receive taxable income where there is no withholding agent must make a declaration within the first 15 days of the following month
- Income is derived from sources abroad- those with residence in China or have resided in China for less than one year in the tax year must make a declaration within 30 days of the end of the tax year
- Individuals whose equities are transferred to another individual or legal entity must submit a declaration within the first 15 days of the following month
- Personal income tax on income from the transfer of restricted stock
- Individuals shall file returns and submit payment for ITT for personal non-monetary investments
For more information see our complete China payroll guide
In France, the tax year ends on December 31, 2020. The deadline for filing taxes varies based on the method chosen:
Filing Online: For most taxpayers filing online is compulsory. The deadline is TBD.
Paper Filing: TBD. The following conditions must be met for one to file through this method:
- One’s residence is not equipped with internet access
- One lives in an area where there is no mobile service
- Those who do not know how to use the internet
- Individuals filing a tax return for the first time and have not received their tax ID from the tax authorities that would allow them to file online
Automatic Filing (based on specific qualifications): No action needs to be taken
As of 2020, for some individuals, the income tax return is optional, and those who meet the following conditions will be able to benefit from this:
- Have been taxed for the previous year (in this case, for the year 2020)
- Have not informed the tax authority of an address change or change in marital status during the 2020 tax year
- Have not created an advance withholding tax account the previous year (i.e. independents)
- Do not require to provide specific information to file their taxes (i.e. caregivers, journalists, non-residents)
- Déclaration Sociale Nominative (DSN)- The DSN is a monthly report that is produced every month with payroll. Its purpose is to communicate information for the social protection of employees to the proper authorities. Since 2019, the DSN replaces other declarations, including CPAM, Usraff, Agirc-Arrco, funds for special schemes, and complimentary organizations. This must be submitted to the authorities by the 5thof the following month for employers with under 50 employees and by the 15thof the following month for employees with over 50 employees.
- Déclaration Annuelle des Données Sociales Unifiée (DADS-U)- This was replaced by the Déclaration Sociale Nominative in 2017, however, there are still some employers that must submit this information. This document is a summary of all salaries and fees paid through payroll and assists with determining employee rights such as health care and retirement. An employer must fill out the DADS-U form under the following circumstances and submit in January 2021:
- The employer employs employees out of the scope of the DSN (i.e. fisherman, dockers)
- The employer is a public service employer
- Employers who filled out the DSN but were unable to transmit data from the insurance or provident institution
- Filing personal income tax- Individuals must file their tax returns online. The due date is published every year by the French tax authority and is TBD.
For more resources, see our France Payroll Guide.
In Germany, the tax year ends December 31, 2020. The deadline for filing tax returns is July 31, 2021.
- Contribution Statement (Beitragsnachweise)- This is a statement that must be submitted each month after the end of a payroll cycle. This statement includes social security contributions, contributions allocated for employer expenses, payment of wage information, and pension payments.
- Annual Payment Document (Lohnsteuerbescheinigung)- This is an annual income tax report that must be provided to each employee no later than February 28, 2021.
- If you are a salaried employee, then there is no need to file tax returns as this is already done through payroll. However, there are certain tax returns that a salaried employee can take advantage of and have up to 4 years to file a voluntary return.
- The following are required to file a tax return:
- An individual whose income comes from outside of Germany
- An individual who received capital gains from an investment
- Some types of employees who receive supplemental income or wage replacement benefits
- An individual who has been assigned to a certain tax bracket
See our complete guide on Germany payroll.
In Spain, the tax year ends on December 31, 2020. The deadline for filing personal income tax is June 30, 2021.
- Social Security- The employer must submit monthly social security contributions to the tax authorities by the 20th of the following month, or in some cases, quarterly (deadlines are the 20th of April, July, October, and January).
- Income Tax Withholding- Employers are also required to withhold the employee’s income tax deductions. The amount should be as close as possible to the employee’s tax liability, so when a tax return is filed, there should be little change in what is owed or what is returned.
- Declaración de la Renta (Personal Income Tax or IRPF)- Individuals must file the IRPF if:
- An individual stays in Spanish territory for more than 183 days out of the year
- When an individual’s main economic interests are centered in Spain
- Has residency in Spain
For more information, see our Spain payroll guide.
Being compliant is key when running a global payroll operation. It’s important to note that companies are subject to incur major fines for not paying these contributions on time and accurately, either on a monthly, quarterly, or yearly basis. So, now is a good time to check to make sure that you are in compliance!