Since 2015, it has been common practice to request invoices with NIF to maximize the IRS refund (or decrease the tax payable). After that, you have until February 25th to go to the E-Fatura portal and validate the previous year’s expenses. If at this point you are putting your hands to your head and saying: “Oops, I didn’t validate the invoices”, know that it is possible to remedy the situation.
Although you probably won’t receive all the money you could if you had validated the invoices within the deadline, there are solutions that can minimize the loss.
I have not validated the invoices. What can I do?
Completely forgot to go to the portal to validate your invoices? It’s not worth beating yourself up over it. Yet there are two possible solutions to deduct some expenses from the IRS and minimize losses.
Claim collection deductions
All the expenses you incurred in 2022, and which include your NIF, are automatically entered into the E-Fatura and the Finance Portal, through the communication, via electronic data transmission, of the elements of the invoices issued by merchants. This is how the Tax Authority (AT) has access to this data.
After accounting for your expenses supported by an invoice and other documents, AT has until March 15th to provide the amounts of deductions for collection calculated.
This information is visible on a new personal page on the Finance Portal, different from the one on the E–Fatura. Here, in addition to expenses proven by invoices, you can consult other expenses deductible by the IRS that you have incurred in entities exempted from issuing an invoice. This is the case of interest on mortgage loans, house rents, user fees, tuition fees for public educational establishments and charges for homes that are public entities.
This is then your first opportunity to remedy the fact that you have not validated the invoices. This is because taxpayers who do not agree with the values of the deductions to the collection ascertained by the AT may complain to this entity between the 16th and 31st of March.
At this stage, claims can be made only general family expenses and expenses eligible for VAT deduction due to invoice requirements (restaurants, accommodation, hairdressers, car repair shops, veterinarians, gymnasiums and sports and recreational education or social passes) – those that were not validated.
Include expenses in filling out the IRS
Another solution is take advantage of the IRS delivery phase (this year from April 1 to June 30) to place the most relevant expenses that may not be included in the automatic declaration.
At that time, you can declare or correct the value of the deductions for health, training and education expenses, real estate and housing charges.
You will, however, have to correct or enter manually these expenses in Annex H of the Model 3 income tax return, since it is not possible to make any changes to the automatic IRS. Note that this correction implies the completion of all fields in Annex H and not just the one(s) you want to change.
Once duly completed, you should keep the respective invoices to be able to prove these expenses.
I didn’t validate the invoices: what are the consequences?
In 2023, the deadline for validating invoices on the E-Fatura portal ran out on February 27th. If, even so, you missed the date nothing bad will happen to you, except that you might lose some money. The good news is that you are not penalized with any kind of fine.
The purpose of requesting invoices with the NIF (Tax Identification Number) is to be able to benefit from discounts when completing the annual income tax return, being reimbursed for part of the taxes.
For IRS purposes, the amounts declared in the invoice automatically enter your personal Finance page, provided that they are communicated electronically by the merchants/company. But for these expenses to be effectively accounted for, it is necessary to validate them online, in the E-Fatura.
Doing this validation is essential for the amount to be considered in the right category. To do this, you have to check all the invoices that are pending on the website, indicating which category they fall into. You can also manually enter invoices that the merchants have not declared (as long as you have saved these receipts).
By validating invoices, you are ensuring that all collection deductions are properly accounted for by your IRS. If you don’t, all outstanding invoices will be considered under general household expenses category, which has a ceiling of only 250 euros of deduction.
With that you can be waive deductions in other important categories and whose maximum amount of deduction is even higher (see below). That is, by not validating the invoices you will lose money that will remain in the State coffers instead of being returned to you as a taxpayer.
I haven’t validated invoices: how much can I lose?
Practically all day-to-day expenses, for which you request an invoice with a tax number, are included in the E-Fatura, from car repairs at the mechanic to the medicines you buy at the pharmacy.
However, not all expenses are equal and for IRS deduction purposes some are “worth” more than others.
Each taxpayer in the household can deduct a percentage of the costs incurred in a given category of expenses, up to a defined maximum amount. But both the percentages and the deduction limits vary according to the category.
So it is possible to deduce:
- 35% of general family expenses up to a deductible maximum of 250 euros (500 per couple);
- 15% of health expenses, up to a deductible maximum of 1000 euros;
- 30% of education expenses, up to a deductible maximum of 800 euros (it can reach 1,000 euros if income from displaced students is included);
- 15% of expenses with housing rents, up to a maximum of 502 euros, or 15% of expenses with interest on loans for own and permanent housing (contracts concluded until 31 December 2011), up to a deductible maximum of 296 euros;
- 25% of expenses with nursing homes, up to a limit of 403.75 euros;
- 15% of VAT paid on total invoices relating to expenses with restaurants, accommodation, hairdressers, car repair shops, veterinarians, gymnasiums and sports and recreational training, and 100% of VAT on the purchase price of social passes, up to a maximum of 250 euros.
Although invoices with NIF automatically enter the E-Fatura, many of them remain pending and waiting for you to indicate to the Tax Authorities the sector to which they relate.
If you don’t, you may be miss important IRS collection deductions. This can even be the difference between receiving a refund or having to pay tax.
It should be remembered that, for taxpayers in the 1st IRS tax bracket (with a taxable income of up to 7,116 euros) there is no limit to what they can deduct from the collection, and that for those in the 2nd and 3rd maximum amount for total deductions is 2500 euros or from 1000 euros, respectively. In the limit, it is part of these amounts that you may be losing.
To prevent this from happening, the best thing is to create the habit of periodically (every month or every quarter) accessing the E-Fatura portal, confirming and validating your expenses. In the long run it will save time and money which, at the end of the year, can make all the difference in your family budget.