Understanding PeopleSoft Global Payroll Core Functionality in Spain

PeopleSoft Global Payroll for Spain and Retroactivity

PeopleSoft Global Payroll for Spain delivers the corrective method because this is the standard (statutory) way to manage retroactivity in Spain.

• The retro process (RETRO) uses the corrective method without variance.

• Retro overrides are used in PeopleSoft Global Payroll for Spain. They serve the following purposes:

  • To facilitate reporting retro calculations to Hacienda.

    The system forwards the tax information for the current period using the IRPF RTR element. This element receives the value from the IRPF AFW element that is forwarded into IRPF RTR in a retro calculation of a month in the same year. In this way, the current month has all of the information affecting taxes. Also, the current tax percentage can be applied to the delta coming from a retro calculation.

  • To manage retro across different tax years.

    For these cases of retro, the system forwards tax values to the current month but it forwards them to elements other than IRPF FWD because they need to be taxed in a different way. In addition, these tax values are reported separately during yearly reporting. Later, the monthly and year-end reports retrieve those values and print them accordingly.

    PeopleSoft Global Payroll also enables you to manage retro from previous years as if they were from the same fiscal year. To accomplish this, modify the value of the variable CLI VR RT A PR FLG (previous year retro flag) with a value that is not Y.

    Note: Define retro overrides on the Retro Process Overrides page.

• You can define your own retro event.

  See Understanding Retroactive Methods.

• You can define your own retro triggers according to your company needs.

• You can define your own pay entities according to your company needs, but the common setup in PeopleSoft Global Payroll for Spain is:

  • Calendar period: Starts in January.

  • Fiscal period: Starts in January.

  • Backward limits: Depends on how you set up PeopleSoft Global Payroll for Spain.

  • Forward limits: Two years.

Launching Retroactivity Across Different Tax Years

When the prior period is in a different tax year, your company normally can't collect the tax due and pay it to Hacienda because the prior year is already closed for tax reporting. This applies to both situations of underpayment and overpayment.

The system manages these retro deltas from a previous year based on the value of the variable CLI VR RT A PR FLG (Previous year retro flag). When the value of this variable is Y, the default value, the system processes retro deltas coming from a previous year separately from the income of the current year. It reports these retro deltas separately on the Model 111 and Model 190 reports. In addition, the system calculates the IRPF for those retro deltas by applying a fixed percentage (currently at 15 percent) instead of the valid IRPF percentage in the retro period.

If you set the value of CLI VR RT A PR FLG to anything but Y, the system processes retro deltas coming from a previous year together with the retro deltas of the current year. It does not manage them separately.

To split the retro details from different years, user will need to enter manual adjustments using the IRPF Tax Data Review ESP page.

Example of Calculating Retroactivity for a Different Tax Year

Assume that both the calendar period and the fiscal period for your pay entity start on January 1. If the retro starts in a different tax year, the fiscal period determines how the retro of taxes is calculated. The following list and table provide the details for this example:

• Launch the calculation for the May 2006 pay period.

• Launch a retro calculation for November 2005.

• Report the tax calculation for the deltas from all the launched retros from November until April in the Model 111 of May 2006.

  In the case of the retro for November 2005 and December 2005, the IRPF for the delta is calculated with a 15 percent tax rate. Model 190 will reflect it accordingly.

Running Corrections in PeopleSoft Global Payroll for Spain

The pure retro process calculates from a target calendar, which receives forwarded tax data regarding deltas and updates the balance accumulators of the recalculated month. You then report the delta from the retro processing for the target calendar through complementary reporting . Thus, if you have already reported social security contributions for a given month and need to recalculate, you use pure retro processing. For example, if a company signs a labor agreement in May but needs to increase salary starting from January 1, then the company must run pure retro processing from January in the May payroll (target calendar). The company then reports the deltas from the retro calculation in a complementary report within the May FAN file.

Corrections, on the other hand, are cases in which you need to rerun a finalized payroll but have not yet reported to social security for that month. Corrections enable you to report the delta on the regular monthly reporting rather than through complementary reporting. You are thus correcting a finalized payroll.

With PeopleSoft Global Payroll for Spain, you can run corrections by using a specific run type or by using Global Payroll core off-cycle functionality. The "Managing Off-Cycle Payments" topics explain both methods in detail.

Managing Reversals through Retroactivity

In some cases, retroactive processing may result in the reversal of payroll results. For example, let us assume that a payee was included in the payroll calculated for August. After you generate and submit all of the tax reports for the August payroll, you discover that the payee actually retired as of August 1st and should not have been included in the August payroll run. You can manage this type of situation through retro processing during the September payroll run. The system accomplishes this by creating a reversal segment for the September payroll run to reverse all of the payroll calculations for the retired payee for the month of August.

You can control whether the system reverses tax calculations in this type of situation using the CLI VR REV DD variable. When the value of this variable is Y, the system reverses all payroll calculations, including taxes. If the value of the CLI VR REV DD variable is N, the system does not reverse the taxes and other deductions that are specified in override sets 3 and 4 of the retro process definition (RETRO) for Spain as not to be reversed. The system instead forwards these deductions to the DD N REVRTDS deduction for the current payroll month.

Customer-Oriented Segment Accumulators

PeopleSoft Global Payroll for Spain also delivers a set of customer-oriented segment accumulators. When you define an earning or deduction element, you can assign the element to these accumulators. You need to decide which accumulators you need to update, based on the following questions:

• How does the element affect gross?

• Is the element taxable?

• Does the element contribute to social security?

Depending on your answer to these questions, you need to select the appropriate accumulator. The following tables provide details about the customer-oriented segment accumulators:

Compensation:

Taxes:

Social Security:

Segmentation:

Other purposes:

Retroactivity Segment Mismatching

When the system recalulates a segmented period for retro and the segmentation dates of the original calculation don't coincide with those of the recalculation, this is called a segment mismatch, and it affects how the system calculates retro deltas.

When segment dates match and payment keys are the same, the system recalculates the original segments to determine the new values for each segment. It then subtracts the old value from the new value for each pay element to determine the retro deltas. It writes the new results to the output tables.

When segment dates don't match, the system treats the old and new values as if they belong to separate segments. It creates reversal segments for each segment that existed in the prior calculation and creates new recalculated segments. A reversal segment has no results because it does not go through gross-to-net processing. The only results that they system writes to the output result tables are for deltas and balance accumulators. For calculating deltas, the system uses zero for the new values.

The new recalculated segments go through gross-to-net processing and generate new values. While processing recalculated segments, the system cannot use the Use Previously Calculated Value check box functionality to get deltas as it normally does during retro processing because the previously calculated values for every element are resolved to zero. In this case, the system retrieves the previous value through arrays.

See Element Attributes Page.

When reading previously calculated values, the system sums the results for all slices and segments previously calculated for the calendar group and stores those values in container elements (RTR AC xxxxx). Then when the system subtracts the previous values from the recalculated values to determine retro deltas, it uses the proportional part of the total previous value, prorated with respect to the current segment days. The proration rule being used is: Active days in the current slice ÷ Active days in the period

Active days in the period is normally defined as the days between the period begin date and period end date, but in the event that an employee changes pay groups in the month, the system uses the period until the effective date of the pay group change. For cases in which contributions are linked to vacations, the system applies the total previous value to the segment in which there is now a termination.

Active days in the period normally means days between Period begin date, and Period End date, but in case employee changes of pay group in the month, then we will consider the period till the effective date of the paygroup change. In case of contributions linked to Vacations we are applying the total previous value to the segment in which there is now the termination

Whenever you need to generate retro deltas or read previously calculated values, you need to analyze whether you want to use container elements (RTR AC xxxxx). To use container elements you must:

1. Create the container element (RTR AC xxxxx).

2. Update the formula RTR FM MAPPING to map the source element—the element for which you want to retrieve previous values—to the target container element.

3. Update the formulas that make use of the Use Previously Calculated Value check box functionality to use the container element in the case of segmentation mismatching.

4. Update the accumulators that determine the behavior of the container elements in the case of element segmentation: RTR AC SEG TAX and RTR AC SEG SS.

   RTR AC SEG TAX (Tax Elements slicing) includes all container elements that should be sliced when the system processes segmentation trigger events that affect taxes.

   RTR AC SEG SS (SS Elements to slice) includes all container elements that should be sliced when the system processes segmentation trigger events that affect social security.

The following is an example of how the system calculates the retro delta for the element SS AC BS CCNRM126S:

SS AC BS CCNRM126S - ([SS AC BS CCNRM126S] * RTR VR FLAG + RTR AC BS CCNRM126 * RTR VR REV SS) >> SS VR TC MONTO

The individual components of this calculation are:

• SS AC BS CCNRM126S: The recalculated value.

• [SS AC BS CCNRM126S]: The previously calculated value. It gets the value only for normal retro (without reversal).

• RTR VR FLAG: The system gives this variable a value of 1 in cases of retro without reversal.

• RTR AC BS CCNRM 126: This is the container element that receives the previous value when segment mismatching occurs.

• RTR VR REV SS: The system gives this variable a value of 1 in cases of segment mismatch.

Element Segmentation Mismatching

Element segmentation mismatching is a situation in which retroactive processing results in element segmentation that differs from the segmentation of the previous calculation. This means that for a group of elements no previous value exists for the current executing dates (current calculation slices). The slices that exist for those elements are different than the ones originally calculated. For example, assume that as part of a retro calculation the system inserts a new segmentation trigger on the 20th day of the month (element segmentation affecting Social Security, such as RISK_CODE). The system recalculates elements such as the Common Contingencies base for two slices (1st - 19th and 20th - 31st), but the original calculation was for just one slice (1st - 31st). This represents an instance of element segmentation mismatching.

When element segmentation mismatching occurs, it is necessary to perform a special calculation to obtain the previously calculated value of the affected elements. The system uses the same calculation that it uses to obtain the previously calculated value for retroactivity segment mismatching. The system detects when an element segmentation mismatch occurs and applies “Spanish” functionality to retrieve the previously calculated value using arrays. This enables Global Payroll for Spain to generate Social Security and Tax deltas correctly.

The formula RTR FM COMPR SEG checks for element segmentation mismatching associated with the following trigger events (trigger event IDs):

• Compensation (COMPRATE)

• Social Security calculation (RISK_CODE and CATEGORZN)

Forwarding Retro Deltas to Inactive Segments

PeopleSoft Global Payroll creates inactive segments to process retro deltas that are forwarded when the pay entity of the source month does not match the pay entity of the current month. This usually occurs whenever payment keys don't match. PeopleSoft Global Payroll also creates inactive segments when there are pending retro changes for inactive employees. The system requires a target calendar to which it can forward deltas (late terminations process through retro).

The system skips gross-to-net calculation during inactive segment processing. You need to ensure, however, that you manage the retro deltas that get forwarded using the setup variable CLI VR CAL DD SG I (Calc IRPF DD in Inac. Segment). This variable indicates to the system whether you want to process tax deductions during inactive segment calculation. Valid values are:

• A (anular): Select if you do not want the system to calculate retro tax deductions with negative net values.

• C (calcular): Select if you want the system to calculate retro tax deductions with negative net values.

Iterative Triggers

This table lists some iterative triggers that are delivered with PeopleSoft Global Payroll for Spain as sample data:

Segmentation Triggers

This table lists some segmentation triggers that are delivered with PeopleSoft Global Payroll for Spain as sample data:

Retroactivity Triggers

This table lists some retroactivity triggers that PeopleSoft Global Payroll for Spain delivers as sample data:

Segmentation Triggers with Earning and Deduction Assignments

In Global Payroll you can define segmentation triggers only for effective-dated records, with one exception: you can define segmentation triggers for the begin and end dated earning and deduction assignment record GP_PYE_OVRD. This exception enables you to assign an earning or deduction to a payee on the Element Assignment by Payee (GP_ED_PYE) or Payee Assignment by Element (GP_ED_ELEM) components, and to segment (and prorate) the element when the assignment begin date comes after the pay period begin date, the assignment end date comes before the period end date, or both.

PeopleSoft Global Payroll for Spain has set up the following earnings so that the system automatically segments and prorates them (using the proration factor defined on the earning definition pages) when the assignment period covers only a portion of the pay period:

If you want to set up additional earnings and deductions to trigger segmentation and proration when they are assigned to payees and the assignment period covers only a portion of the pay period, access the Trigger Definitions component (GP_TRGR_SETUP) and add these elements to the segmentation trigger definition for the GP_PYE_OVRD record.

In the case of deductions or nonbasic earnings, you also need to specify formula GEN FM SEGMNTCN as a post-process formula and specify the proration to use. PeopleSoft Global Payroll for Spain delivers GEN PO DIAS SLICE that you can use or modify, or you can create a new formula to fit your requirements.