Subject

Regulations: Art. 42.1 Law Income Tax

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 not always when the employer satisfies or pays amounts to third parties so that they provide their worker with the good, right or service in question, we are in the presence of monetary remuneration, because it is considered that there is payment mediation, since sometimes the remuneration in kind is instrumented through a direct payment from the employer to the third party in compliance with the commitments assumed with its workers, either in the collective agreement or in the employment contract itself and, in such 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 remuneration in kind agreed in the employment contract, so all the provisions regarding remuneration in kind included in article 42 of the Income Law would apply.

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.