Bizum is a Spanish company, which allows you to make payments or request money if you have a Spanish account number from a bank linked to it.
It enables transfers between individuals and companies from your smartphone, and all you need in order to pay someone is their phone number.
Bizum has become so popular in Spain that’s it’s now become an almost essential payment method for millions of people across the country.
It’s used when you owe money to friends and family, to transfer small amounts or even pay rent.
Bizum: Why you probably need this free payment app for life in Spain
But it’s important to be aware, although it may act like an app, Bizum is essentially a bank account, which means that it has certain limits and conditions when it comes to paying taxes in Spain.
There can even be huge fines for unjustified movement of amounts of money through Bizum or for not declaring amounts you receive through it.
On its own website, Bizum states that payments are recorded in the same way as other banking movements, so money sent through this application is subject to the same limits as any money transfer. The Hacienda can track a Bizum movement when necessary and depending on the circumstances.
Law 7/2012 states that the Tax Agency is informed and may demand explanations if it detects:
- Cash transfers exceeding €3,000.
- Bank transfers greater than €10,000.
- Loans and credits above €6,000.
- Cash payments when paying with €500 bills.
These situations above won’t usually apply when using Bizum as it’s typically for smaller amounts, but the Tax Agency could request information about any Bizum payments, no matter how small, if they are carrying out tax investigation or for any other reason it considers appropriate.
This generally means that the tax man will only investigate your Bizum operations if circumstances require it.
But this doesn’t mean that you shouldn’t declare any income received via Bizum, including gifts.
Gift tax is levied on the increase of wealth because you received a donation from someone while they are still alive.
According to Section 618 of the Spanish Civil Code, “A donation is an act of liberality through which a person freely provides money or goods to the favour of another person, who in turn accepts".
Technically if you receive a monetary gift from someone whether they’re a family member or a friend, no matter how big or how small, and are a Spanish taxpayer, you are required to pay tax on it. These includes any gifts received via Bizum.
If you receive any extra income via Bizum, you will also need to declare this. If you’re employed this will likely be on your annual personal income tax return - the declaración de Renta and if you’re self-employed, you will declare this during your quarterly returns, like all other income.
READ ALSO: How much money can I give someone in Spain without paying tax on it?
If the Treasury investigates and detects any unjustified irregularity or any income or gifts that you haven’t declared, you could face hefty fines.
The fines in these cases depend on the severity and type of offence committed.
There are three types of infractions in Spain - minor, serious and very serious – and each of them carries different amounts of fines.
Minor infraction: You could be fined up to €3,000, as well as a surcharge of up to 50 percent of the amount that was not paid.
Serious offence: It is considered a serious infraction when the base of the sanction exceeds €3,000 or when the violaion represents more than 50 percent of the base of the fine. There could also be a surcharge of between 50 and 100 percent of the amount that was not paid.
Very serious offence: 150 percent of the amount not declared. It is considered a tax crime if the amount defrauded exceeds €120,000.
These fines are steep, so as you can see, it's in your own interest to declare money you receive via Bizum and not have to worry about it.
Journalists at The Local are not tax experts, we learned the heard way by reading laws and rules, and speaking with experts. If you're unsure about how to declare any payments or which payments you should declare it's important to contact a tax professional in order to advise you.
Comments