Modelo 111 and Modelo 190: How to Report Withholdings on Employees and Professionals Without Errors

If you pay salaries or invoices from professionals, the Spanish tax authority turns you into its collaborator: you withhold part of the payment on account of the recipient’s personal income tax (IRPF) and pay it over yourself. This mechanism is reflected in two forms that are best understood together: Modelo 111, filed every quarter, and Modelo 190, the annual summary that must match what you reported during the year.

Who must withhold and what goes in Modelo 111

Companies, as well as self-employed individuals and other business owners carrying on an economic activity, are required to withhold when they pay certain types of income. A private individual paying in a personal capacity does not withhold. The most common payments that trigger a withholding obligation are:

• Employment income: wages and salaries, as well as other employment-related remuneration such as per diems that are not exempt from tax.
• Professional activities: invoices from lawyers, business agents, doctors, designers, translators, trainers and other professionals who invoice with IRPF withholding.
• Other cases: prizes, certain agricultural, livestock or forestry activities, and remuneration paid to company directors.

Commercial property rental has its own form (Modelo 115) and does not go in Modelo 111. Mixing them up is one of the most common slip-ups.

The obligation to file Modelo 111 arises when you have made withholdings during the quarter. It is filed quarterly, during the first twenty calendar days of the month following the end of the quarter. The fourth-quarter filing has a slightly different deadline, ending at the end of January, so it is worth checking the official calendar for the year. If you have not withheld from anyone in a quarter, there is generally nothing to file, unless you are a filer who must submit a “no activity” return depending on your specific circumstances.

Applicable withholding rates

The rate depends on who is being paid and what for:

• Employees: there is no fixed percentage. It is calculated using the AEAT’s general procedure, based on the expected annual salary, family situation and the employee’s circumstances. The result changes from one payslip to the next, which is why you do not “make up” a percentage: you use the payroll software or the official simulator.
• Professionals: as a general rule, 15% of the invoice base (excluding VAT).
• Professionals starting out: a reduced rate of 7% in the year they register and the following two years, provided they did not practise in the previous year and the recipient notifies the payer in writing.
• Directors and board members: a specific rate applies, with a reduction for small entities. Check it every year before applying it.

An example with round numbers: a designer invoices you €1,000 plus €210 VAT. You withhold 15% of €1,000, which is €150. You pay them €1,060 (1,210 − 150), and that €150 goes in the professionals box of the Modelo 111 for the quarter in which the invoice was accrued. Withholding is always calculated on the base amount, never on the total including VAT.

How to reconcile the quarterly 111 with the annual 190

Modelo 190 is filed in January of the following year and details, recipient by recipient, what you paid and withheld throughout the whole year. The logic is simple: the sum of the four Modelo 111 filings must match the totals in the 190, in terms of the number of recipients, the amounts paid and the withholdings paid over. The tax authority cross-checks both and also compares them with the data each recipient sees in their income tax draft.

The most common mismatches are these:

• Invoice assigned to the wrong quarter: withholding is reported when the payment is made or becomes due, not when you happen to remember it.
• Withholding made but not paid over, or paid over on the wrong form (for example, a rental in the 111).
• Recipients omitted from the 190, often an occasional professional who invoiced only once.
• Wrong key and subkey codes: the 190 distinguishes between employees, professionals and other income, and a wrong key can carry a mismatch through.
• Incorrect identification details: a wrong tax ID or a name that does not match the tax register leads to rejections.

A good practice is to reconcile at the close of each quarter: the tax authority account, a creditor account for withholdings made, should be at zero after the 111 is paid. If it carries a balance, something has been over- or under-booked, and it is much easier to fix in April or July than in January with the 190 looming.

If you spot an error in a Modelo 111 that has already been filed, it is corrected with a supplementary return, and the 190 must reflect the final figure. Filing late or with errors leads to surcharges or penalties, so getting ahead of it is cheaper.

At Zythos Business we handle our clients’ accounting and tax filings as a single system: withholdings are reconciled against the books every quarter, so the January 190 is a confirmation rather than a surprise. If you would like to review how you are reporting your withholdings, we would be happy to lend a hand.