General scheme

The operations necessary to determine the amount of net income from work that is included in the tax base are represented in the following diagram:

Phase 1:

(+) Full amount accrued (monetary remuneration).

(+) Tax assessment plus non-transferred income on account (remunerations in kind).

(+) Business contributions to social security systems (imputed amounts).

(+) Contributions to the protected assets of people with disabilities.

(−) (Reductions applicable to the following income:

• Generated over a period of more than two years.
• Obtained in a notoriously irregular manner over time.
• Benefits received from public social security schemes.
• Benefits received from private social security systems (transitional regime).

(=) Full performance of work.

Phase 2:

(−) Deductible expenses:

• Contributions to Social Security or mandatory mutual funds for public employees.
• Deductions for passive rights.
• Contributions to orphanages or similar institutions.
• Dues paid to unions.
• Fees paid to professional associations, if membership is mandatory.
• Legal defense expenses in litigation with the employer.
• Other expenses:
  • Fixed amount applicable in general
  • Increase due to geographical mobility
  • Increase for active workers with disabilities

(=) Net income from work

Phase 3:

(−) Reduction for obtaining employment income: Taxpayers with net income from work less than 16,825 euros and income other than work that does not exceed 6,500 euros.

(=) Reduced net return on labor.