30 June 2021
WHAT IS THE ISOLATED ACT? WHAT ARE THE ADVANTAGES AND OBLIGATIONS?
The isolated act is the declaration of a commercial act or provision of services that is not repeated.
Thus, this document replaces the need to open an activity with the Tax Authority in order to be able to issue an invoice, receipt-invoice or receipt.
WHAT ARE THE ADVANTAGES AND OBLIGATIONS?
Advantages
One of the main advantages of issuing an isolated act is that you do not have to open an activity with the Tax Authority as an independent worker, nor register with the Social Security. In addition, according to article 30 of the Personal Income Tax Code (CIRS), taxpayers who issue isolated acts are exempt from organized accounting for those acts.
The coefficients of the simplified regime are applied to determine the taxable income of isolated acts, when the taxpayer's annual gross income is less than or equal to €200,000.00. If this income is higher, then the same rules apply as for taxpayers with organized accounting, as explained in article 30 of the CIRS.
Obligations
Article 31.3 of the CIVA further establishes that the isolated act cannot exceed the limit foreseen in paragraphs e) and f) of no. 1 of article 29 of the CIVA, i.e. 25,000.00 euros. If this value is exceeded, a prior declaration of commencement of activity is required and, therefore, it can no longer be considered an isolated act. There are, however, exceptions, which are provided for in article 9 of the CIVA. The VAT exemption applies, for example, to the provision of services by professionals such as doctors, dentists, midwives, and nurses.
Note: If you are not exempt from paying VAT, you should be aware that after the isolated act is issued, this amount must be paid by the end of the month following the conclusion of the service or sale.
In fact, if the isolated act exceeds EUR 12,500.00, then it is also necessary to make withholding tax. The withholding rate can vary between 11.5% and 25%, as explained on this page of the finance portal. The income from an isolated act, which is of a commercial or professional nature, is subject to IRS, by submitting annex B of the IRS model 3 declaration.
After the taxable income is determined, it is added to the income from other categories (if any) and, finally, it is taxed at the normal IRS rate, applicable to all income.
Thus, this document replaces the need to open an activity with the Tax Authority in order to be able to issue an invoice, receipt-invoice or receipt.
WHAT ARE THE ADVANTAGES AND OBLIGATIONS?
Advantages
One of the main advantages of issuing an isolated act is that you do not have to open an activity with the Tax Authority as an independent worker, nor register with the Social Security. In addition, according to article 30 of the Personal Income Tax Code (CIRS), taxpayers who issue isolated acts are exempt from organized accounting for those acts.
The coefficients of the simplified regime are applied to determine the taxable income of isolated acts, when the taxpayer's annual gross income is less than or equal to €200,000.00. If this income is higher, then the same rules apply as for taxpayers with organized accounting, as explained in article 30 of the CIRS.
Obligations
Article 31.3 of the CIVA further establishes that the isolated act cannot exceed the limit foreseen in paragraphs e) and f) of no. 1 of article 29 of the CIVA, i.e. 25,000.00 euros. If this value is exceeded, a prior declaration of commencement of activity is required and, therefore, it can no longer be considered an isolated act. There are, however, exceptions, which are provided for in article 9 of the CIVA. The VAT exemption applies, for example, to the provision of services by professionals such as doctors, dentists, midwives, and nurses.
Note: If you are not exempt from paying VAT, you should be aware that after the isolated act is issued, this amount must be paid by the end of the month following the conclusion of the service or sale.
In fact, if the isolated act exceeds EUR 12,500.00, then it is also necessary to make withholding tax. The withholding rate can vary between 11.5% and 25%, as explained on this page of the finance portal. The income from an isolated act, which is of a commercial or professional nature, is subject to IRS, by submitting annex B of the IRS model 3 declaration.
After the taxable income is determined, it is added to the income from other categories (if any) and, finally, it is taxed at the normal IRS rate, applicable to all income.
