Mutualists: New Income Tax Refund Schedule and Controversy

The controversy stems mainly from the measure’s retroactive effect, uncertainty and the postponement of refunds—which may be delayed by several more years—as well as possible inconsistencies in administrative proceedings already under way.

The Tax Agency nevertheless maintains that the new system is intended to make processing more orderly and consistent. Critical mutualists, however, point to the delay in receiving what many regard as established rights.

1. Background: “Mutualist refunds” and the Second Transitional Provision of the Personal Income Tax Act

• For years, personal income tax rules have provided for certain special cases involving mutualists, such as professionals enrolled in social welfare mutual societies as an alternative to the self-employed social security scheme.

• The Second Transitional Provision (DT 2) of the Personal Income Tax Act governs how amounts paid to these mutual societies are included and offset. Subject to certain conditions, it allows taxpayers to seek a refund of some personal income tax paid in previous returns where those contributions are recognised as having had specific tax treatment or as being deductible.

Over time, many mutualists have therefore asked the Tax Agency to amend their returns (or filed specific refund requests) to recover personal income tax for open tax years, relying on this interpretation of DT 2.

2. What the Sixteenth Final Provision of Law 7/2024 does

Law 7/2024 of 20 December introduces, in its Sixteenth Final Provision (DF 16), a new procedure for handling these refunds. The change took effect on 22 December 2024 and has significant consequences:

1. The previous refund application form for mutualists under DT 2 of the Personal Income Tax Act, which had been used until then, is no longer valid.

2. Refund applications for 2019–2022 and earlier open years are cancelled if they had not been resolved favourably before 22 December 2024.

   • This means that even if an application had been filed, it lapses if the Tax Agency had not approved and paid the refund before that date.

   • The law nevertheless specifies that these cancelled applications interrupt the limitation period, so the mutualist’s right to make a claim does not disappear.

3. Refunds already paid are unaffected: if the AEAT has already paid the refund, the decision remains final and is neither revoked nor reviewed under DF 16.

As a result, many mutualists who had already started the process will have to reformulate their requests under the new system to be introduced from 2025 onwards.

3. New application procedure and filing timetable (2019–2022 and earlier open years)

According to the information note, the new rules require refund applications for past tax years (2019, 2020, 2021 and 2022, as well as earlier open years) to be filed one year at a time, in separate years and in parallel with the annual tax return campaign, according to this timetable:

• 2025: a form will be made available to claim a refund for 2019 personal income tax (and earlier open years).

• 2026: refund for 2020 personal income tax.

• 2027: refund for 2021 personal income tax.

• 2028: refund for 2022 personal income tax.

The phased approach is presumably intended to prevent the Tax Agency from receiving every application for previous years at once. Each year, during the voluntary filing period for the annual tax return, a specific form will be available at the AEAT’s online office for mutualists to claim a refund for that particular year.

4. Controversies arising from the change

1. Retroactive effect and cancellation of pending applications

   • One of the main criticisms is that DF 16 has an almost retroactive effect: many refund applications had been filed months or even years earlier and were still pending. The new law cancels all applications not approved before 22 December 2024, forcing mutualists to refile under the new system.

   • Some mutualist groups question legal certainty because proceedings already under way have been rendered ineffective, creating frustration and uncertainty.

2. Longer delays in receiving refunds

   • Requiring applications to be reopened in future tax years (2025–2028) postpones the possibility of payment for many people.

   • Mutualists who have been waiting years for a decision may have to wait for the phased timetable, resulting in delays of several years depending on the tax year claimed; for example, a refund for 2022 would be claimed in 2028.

3. Additional administrative complexity

   • Invalidating the previous form and requiring a separate procedure for each tax year creates an additional administrative burden for taxpayers and potentially for the Tax Agency itself.

   • Many mutualists fear confusion and problems when resuming claims that were already substantiated and filed.

4. Appeals for reconsideration and economic-administrative claims

   • If a mutualist appealed or filed an economic-administrative claim concerning an amendment request, that proceeding may also be affected by cancellation of the original request. This raises questions about how the connection between the proceedings will be handled. The law interrupts the limitation period, but it does not immediately clarify whether the appeal must be closed and a new one filed.

5. Divergent interpretations and legal certainty

   • There are concerns that DF 16 may be interpreted differently, particularly in unusual or unresolved cases—for example, applications where the Agency has issued a request for information but no final decision, or verification proceedings still in progress.

   • Advisory groups and some professional associations have called for greater legal certainty and clearer rules.

5. Practical consequences and recommendations

1. If the AEAT grants your refund before 22 December 2024:

   • You will receive the refund and your file will be closed. The regulatory change will not affect you.

2. If your application had not been granted (or paid) by 22 December 2024:

   • It will be cancelled automatically.

   • However, you will have interrupted the limitation period.

   • You will have to submit a new request using the new form in the appropriate year under the official timetable (2019 in 2025, 2020 in 2026, and so on).

3. Filing timetable (2025–2028):

   • You must file a new refund application for each personal income tax year during that year’s voluntary tax return filing period.

   • If you claimed refunds for several years, you will refile them gradually (for example, in 2025 for 2019 and earlier open years; in 2026 for 2020, and so on).

4. Documents and supporting evidence

   • Keep all relevant documents (mutual society certificates, copies of earlier applications, notices and so on). Although the earlier application is formally cancelled, the same information may be needed for the new procedure.