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Practical Income Manual 2021.

Work income by nature

Regulations: Art. 17.1 Law Personal Income Tax

In particular, the full income from work includes:

  1. Salaries and wages.

  2. Unemployment benefits.

    Said benefits received for unemployment in the single payment modality are declared exempt in article 7 of the Personal Income Tax Law .

  3. Remunerations for representation expenses.

  4. Per diems and allowances for travel expenses, except those for transportation and those considered normal for maintenance and stay in hospitality establishments with the legally established limits discussed below.

    See in this regard the per diems and allowances for transportation expenses and normal expenses for maintenance and stay of tax referred to in article 9 of the Personal Income Tax Regulations.

  5. The contributions or contributions paid by the promoters of pension plans provided for in the consolidated text of the Law regulating pension plans and funds, approved by Royal Legislative Decree 1/2002, of November 29 ( BOE of December 13), or by the promoter companies provided for in Directive (EU) 2016/2341 of the European Parliament and of the Council of December 14, 2016, relating to the activities and supervision of funds of employment pensions.

    Precision: although article 17.1.e) of the Personal Income Tax Law refers to Directive 2003/41/EC of the European Parliament and of the Council, of June 3, 2003, it has been repealed with effect from January 13, 2019, by Directive (EU) 2016/2341, which also establishes that references to Directive 2003/41/EC will be understood to be made to it.

  6. Contributions or contributions paid by employers to meet pension commitments in the terms provided for in the first Additional Provision of the consolidated text of the Law regulating pension plans and funds, approved by Royal Legislative Decree 1/2002 , previously cited, and in its implementing regulations, when those are attributed to the people to whom the benefits are linked.

    This tax charge will be voluntary in nature in collective insurance contracts other than corporate social security plans, and the decision adopted with respect to the rest of the premiums that are paid must be maintained until the termination of the contract. insurance contract.

    However, the tax imputation becomes mandatory in the following cases:

    • In risk insurance contracts (such as, for example, insurance that covers the contingency of death or disability).

    • When the insurance contracts cover jointly the contingencies of retirement and death or disability, in the part of the premiums paid that corresponds to the capital at risk for death or disability, provided that the amount of said part exceeds 50 euros per year.

      For these purposes, the difference between the insured capital for death or disability and the mathematical provision is considered capital at risk.

    • In insurance contracts in which the tax imputation of premiums is voluntary, the imputation will be mandatory for the amount that exceeds 100,000 euros per year per taxpayer and with respect to the same employer, except in collective insurance contracted as a result of collective dismissals carried out in accordance with the provisions of article 51 of the Workers' Statute.

      Now, in group insurance contracted before December 1, 2012, in which premiums of an expressly determined amount appear, and the annual amount of these exceeds this limit of 100,000 euros, a transitional regime is established that determines that in these cases The imputation for this excess will not be mandatory (See the twenty-sixth transitional provision of the Personal Income Tax Law ).

Covid-19:Temporary Employment Regulation File (ERTE) and extraordinary benefit for cessation of activity for self-employed workers as a consequence of the health crisis situation caused by Covid-19.

Both the measures adopted regarding temporary suspension of contracts and temporary reduction of working hours (ERTE) and the ordinary and extraordinary benefits for cessation of activity for the self-employed corresponding to the protective action of Social Security are considered income of the work fully subject to Personal Income Tax .

  1. Employment regulation files.

    The Temporary Employment Regulation File (ERTE) is regulated in article 47 of the Workers' Statute and can be used when there are economic, technical, organizational or production causes or those derived from force majeure, those companies that, on a temporary basis, , intend to reduce the working day or suspend employment contracts of all or part of its workforce in order to safeguard the viability of the company.

    Therefore, there are two types of ERTE for Temporary Employment Regulation Files.

    • ERTE for reduction of working hours (art. 47.2 Workers' Statute)

      In this case, the ERTE means for the affected workers the reduction of their working day for a certain period of time, either by reducing the hours of the daily work day, or by reducing the number of working days per week.

      During this period, the affected workers will be able to collect unemployment benefits for the corresponding part of the working day that has been reduced.

    • ERTE suspension of employment contracts (art. 47.3 Workers' Statute)

      In this case, the ERTE determines the suspension of the employment contracts of the affected workers for a certain period of time.

      This is in no case a dismissal since once the circumstance that gave rise to the ERTE ends, the employer has the obligation to reinstate the affected workers under the same conditions in which they were were prior to its application.

      During the time in which the affected workers have their contract suspended, they will collect unemployment benefit .

  2. Extraordinary benefits for cessation of activity.

    They are extraordinary economic benefits due to cessation or reduction of the self-employed person's economic activity as a result of the COVID-19 epidemic that correspond to the protective action of Social Security.

    These are, therefore, extraordinary Social Security benefits for self-employed workers, the nature of which is analogous to the economic benefit for total, temporary or definitive cessation of the activity that was established in Law 32/2010, of 5 December. August, which establishes a specific system of protection for cessation of activity of self-employed workers ( BOE of 6) and is currently regulated in articles 327 et seq. of the consolidated text of the General Law of Social Security, approved by Royal Legislative Decree 8/2015, of October 30 ( BOE of 31).

    Consequently, the classification of these extraordinary benefits due to COVID-19 (as well as that of the aforementioned general benefit for cessation of activity) would be that of income from work, in accordance with article 17.1 b) of the Personal Income Tax Law, which includes unemployment benefits among the full income from work, understood in a broad way and not only comprehensive of the situation of cessation of activity corresponding to employed workers.

    Among these benefits are the extraordinary benefits for cessation of activity of articles 5, 6, 7 and 8 of Royal Decree-Law 2/2021, of January 26, on reinforcement and consolidation of social measures in defense of employment ( BOE of 27); or those provided for in articles 6, 7, 8 and 9 of Royal Decree-Law 11/2021, of May 27, on urgent measures for the defense of employment, economic reactivation and protection of self-employed workers ( BOE of 28).