Why SEPE can withhold less income tax from you with unemployment and how you can request a change

When a person is left without a job but has previously contributed enough to be able to collect the contributory benefit for unemployment, unemployment, their situation will not change too much in the face of the Treasury, since the body considers this benefit, the same as a salary, a work income.

In this way, all people who receive unemployment will suffer from this benefit withholdings for Personal Income Tax (IRPF). The Public State Employment Service: “The withholding of personal income tax occurs because unemployment benefits are considered as income subject to taxation according to tax legislation.”

But, what withholding is made on the amount of unemployment? The SEPE explains that “it is established according to the total amount that you will receive as unemployment benefits planned for the current calendar year” and that the information on personal and family circumstances that the citizen provides is also taken into account for this purpose. to the institution at the time of requesting the benefit.

It works very similar to that of the withholdings that companies and their human resources departments carry out on their workers’ payrolls, since at this point the age of the taxpayer influences, if he is single or married, if he has children, if he has any percentage of disability…

However, SEPE withholdings are traditionally known to be of low calibre. In the vast majority of cases, the entity practices minimal or even non-existent withholdings for benefits, as happened in mid-2020 after the millions of Ertes as a result of the economic crisis derived from the coronavirus pandemic.

The main reason why the SEPE practices lower withholdings (or even non-existent ones) is that in some cases “the expected amounts of benefit do not reach the mandatory minimum required by the tax regulations for the application of withholding” and the agency simply opts for minimum retention.

This action also has a second reading: due to the nature of these benefits, intended to financially cover their beneficiaries in stages of unemployment, lower withholdings are made to guarantee a greater amount of said benefit, which already suffers the relevant reduction in terms of contributions to Social Security.

How to change unemployment income tax: the SEPE method

All in all, if the citizen who receives one of these contributory unemployment benefits prefers to increase the personal income tax withholding month by month, the SEPE provides them with the option of requesting it, so that the body would practice new (and more substantial) withholdings after this request. .

The SEPE that the citizen “must request it in writing five days before the end of the month prior to the collection of the payroll” informing of the new type he wants. Following this request, the unemployment beneficiary will have that chosen personal income tax withholding every month and until the end of the year unless he “resigns in writing or requests a new higher rate.”