Skip to main content
Practical Income Manual 2021.

3. Personnel costs

Within this category we can include the following concepts that appear perfectly differentiated in the Personal Income Tax declaration .

a. Wages and salaries

Amounts accrued by third parties by virtue of an employment relationship must be included. These include salaries, extraordinary payments, remuneration in kind (including the payment on account that must be made for them, provided that it has not been passed on to the recipients), as well as prizes.

Specialties in personal income tax of work benefits between members of the same family unit

Regulations: Art. 30.2.2 Law Personal Income Tax

Remuneration paid to other members of the holder's family unit is considered a deductible expense, provided that all of the following requirements are met:

  • That the spouse or minor children work regularly and continuously in the business or professional activities carried out by the owner of the same.

  • That the spouse or minor child of the owner of the activity live with the latter.

  • That the appropriate employment contract exists, of any of the modalities established in the Workers' Statute and other development provisions.

  • That there is affiliation of the spouse or minor child to the corresponding Social Security regime.

  • That the remuneration stipulated with each of them, corresponding to their professional qualifications and the work performed, is not higher than the market. If they are higher, the excess over the market value will not be a deductible expense for the payer.

    The stipulated remuneration is considered work income for its recipients for all tax purposes.

b. Employers’ social security

The amounts paid to Social Security for social contributions paid by the company based on the salaries and wages of its staff will be included.

c. Compensations

It includes the amounts that are delivered to company personnel to compensate them for damage or loss, although they are exempt for the recipient. Severance compensation and early retirement are specifically included in this section.

d. Per diems and travel allowances for employed personnel

The amounts paid by the company to cover or compensate for the expenses of maintenance and stay in restaurants, hotels and other hospitality establishments, as well as the transportation expenses incurred by its workers for traveling to municipalities other than their usual place of work, will be included. (although they are exempt from personal income tax for the recipient).

e. Contributions to social security systems established in favor of workers

• Contributions to pension plans or corporate social security plans

In accordance with the provisions of article 14.2 of the LIS , contributions or contributions made by the businessman or professional as promoter of a pension plan regulated in the consolidated text of the Law for the Regulation of Pension Plans and Funds, as well as those made to corporate social security plans in which their employees are participants or insured, provided that they are attributed to each participant or insured in the corresponding part, unless deals with those made in favor of beneficiaries in an extraordinary manner when it is necessary to guarantee ongoing benefits or the rights of participants in plans that include defined benefit regimes for retirement and it has been revealed, through actuarial reviews. , the existence of a deficit in the pension plan.

Since January 1, 2013, collective dependency insurance has been accepted as insurance contracts suitable for implementing pension commitments assumed by companies.

See in this regard the first Additional Provision of the consolidated text of the Law on the Regulation of Pension Plans and Funds in the wording given by Law 27/2011, of August 1 ( BOE of 2).

• Contributions made to cover contingencies similar to those of pension plans

In accordance with the provisions of article 14.2 of the LIS , business contributions made to cover contingencies similar to those of pension plans will be deductible, provided they meet the following requirements: 

  • Charged for tax purposes to the persons to whom the benefits are linked. 

  • That the payer irrevocably transmits the right to receive future benefits.

  • That the payer transmits the ownership and management of the resources of which said contributions consist.

Likewise, the contributions made by the promoting 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 occupational pension funds ( FPE), provided that the requirements listed above are met and the contingencies covered are those provided for pension plans in their regulatory regulations.

Note: Please note that Directive (EU) 2016/2341 of the European Parliament and of the Council of December 14, 2016, repealed Directive 2003/41/ EC to which Article 51 of the Personal Income Tax Law refers, with effect from January 13, 2019, establishing that the references to the aforementioned Directive 2003/41/EC They will be understood to be made to the aforementioned Directive ( EU ) 2016/2341.

Finally, indicate in relation to contributions to social security systems established in favor of workers that, in accordance with the provisions of article 14.1 of the LIS, expenses for provisions and internal funds will not be deductible for the coverage of contingencies identical or analogous to those that are the subject of the Consolidated Text of the Law Regulating Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29. These expenses will be tax deductible in the tax period in which the benefits are paid.

f. Other personnel expenses

This heading may include staff training expenses, both regular and sporadic, premiums for life insurance contracts, accidents, illness, etc., except for Social Security contributions and any other related to personnel. at the service of the activity that cannot be considered pure liberality.

Expenses that, in accordance with usage and customs, are incurred with respect to company personnel (gifts, Christmas baskets, etc.) are not considered pure liberalities, which is why they may constitute deductible expenses.