Subject

Regulations: Art. 42.1 Law PIT

Income from work in kind is the use, consumption or obtaining, for personal purposes, of goods, rights or services free of charge or at a price below the normal market price, even when they do not entail a real expense for the person granting them, provided that they derive, directly or indirectly, from personal work or from an employment or statutory relationship.

Benefits in kind must be distinguished from other cases in which there is a simple mediation of payment by the company for expenses incurred by the employee. That is, cases in which the company simply pays an amount on behalf of and at the request of the employee. In these cases, the compensation required by the employee from the company does not consist of the use, consumption or obtaining of goods, rights or services, but rather it is a compensation that the company has the obligation to pay in monetary form, although by virtue of the mandate carried out by the employee, the payment is made to a third party designated by the latter. That is to say, the worker allocates part of his or her monetary remuneration to the acquisition of certain goods, rights or services, but payment for these is made directly by the employer. In these cases, it will be an application of monetary income from work.

However, it should be noted that when the employer pays or satisfies amounts to third parties so that they provide their employee with the good, right or service in question, we are not always in the presence of monetary compensation, considering that there is payment mediation, since sometimes the compensation in kind is implemented through a direct payment from the employer to the third party in compliance with the commitments assumed with its employees, whether in the collective agreement or in the employment contract itself and, in such a case, the amounts paid by the company to the suppliers would not be considered as a case of payment mediation, in the terms indicated above, but as compensation in kind agreed in the employment contract, so all the provisions regarding compensation in kind contained in article 42 of the Law of the PIT .

Note: When the payer of the work performance gives the taxpayer amounts in cash so that the latter can acquire the goods, rights or services, the performance will be considered monetary, so the special rules on remuneration in kind discussed in this section are not applicable to it.