Our income statement is in the hands of algorithms. And they don’t always let us apply all the deductions


Since 2019, the income statement must be done via the web. The tax authorities decided that the “pre-declaration” could no longer be submitted on paper, because duplicates were generated and then had to be corrected. The whole system has gone digital, with the benefits and implications that entails.

The Treasury and its close relationship with ‘Big Data’. The use of algorithms, artificial intelligence and “Big Data” is nothing new for the Treasury. For some time, they have been using these tools to examine the declarations of large fortunes, as well as those of companies which must discharge what is called ‘Google Tax’.

In the case of these large companies, the Treasury even uses device geolocation to find out where the technology companies’ customers are and charge them accordingly.

The Supreme Court has already said that you cannot be accused of fraud (with home taping) based on statistics. In November, the Supreme Court upheld its doctrine that house searches cannot be conducted without notice. Along with this decision, he also determined that by virtue of statistics and calculations, it was not enough to consider the signs of fraud to enter the home, except for the examination of the analyzed documentation.

In other words, the use of “Big Data” to detect possible signs of fraud does not serve as an excuse to formally carry out a home inspection. Take, for example, credit card payment data that doesn’t add up and is above the industry average. The Treasury may believe that this user is spending more than he should and this may be a possible indication that he has other undeclared sources of income. This statistic should not be enough, according to the Supreme Court, to carry out an inspection.

The Treasury website algorithm decides which boxes we can tick. In the 2019 and 2020 income tax campaigns, it appeared that the web algorithm did not allow to apply certain personal income tax deductions that should be possible by law.

With the transition to Renta Web, the peculiarity that we find ourselves in the hands of these algorithms occurs when it comes to seeing which deductions in the IRPF we can apply. If the algorithm considers a cell to be invalid, we have no way to add it. This is the case denounced by the Spanish Association of Tax Advisors (Aedaf) during a conversation with Vozpópuli.

The possibility of applying a 3% on the amount of the acquisition of a property is cancelled. The specific case is for home equity returns, although the phenomenon could apply to many other deductions in case the Treasury algorithm determines.

The specific case refers to the two methods that exist when calculating the depreciation of the property, but the website disables the activation of one of them. According to the association, “the regulation goes beyond the law, interpreting it to the detriment of the taxpayer”. An interpretation that can make a difference of thousands of euros.

The State’s attorney sees this practice as legitimate, but the National Court must rule (with an eye on 2021 revenues) The National Court must rule on the use of this algorithm in the 2019 and 2020 Models. Based on this, one thing or another will be applied for the next campaign which will start on April 6th.

Who spoke, according to Vozpópuli, is the state attorney, considering that the use of this algorithm is legitimate. Despite this, Aedaf received a response from the Tax Agency explaining that it will allow taxpayers to rectify their self-assessments. A possibility that has been admitted, but is not officially reflected. For the moment, pending judicial resolution, taxpayers are in the hands of algorithms.

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