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Practical manual for Income Tax 2022.

Work income by nature

Regulations: Art. 17.1 Law Income Tax

In particular, the following are included among the gross earnings from work:

  1. Salaries and wages.

  2. Unemployment benefits.

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

  3. Remuneration in the form of representation expenses.

  4. Diets and allowances for travel expenses, except for those for transportation and those considered normal for food and lodging in hospitality establishments, with the limits established by regulations, which are discussed below.

    See in this regard the allowances and allowances for travel expenses and normal maintenance and accommodation expenses 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Tax Law refers to Directive 2003/41/EC of the European Parliament and of the Council, of June 3, 2003, it has been repealed with effect from January 13, 2019, by Directive (EU) 2016/2341, which also establishes that references to Directive 2003/41/EC will be understood to be made to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 under the terms set forth in the First Additional Provision of the consolidated text of the Law regulating pension plans and funds, approved by Royal Legislative Decree 1/2002, cited above, and in its implementing regulations, when they are attributed to the persons to whom the benefits are linked.

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

    However tax imputation becomes in the following cases:

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

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

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

    • In insurance contracts in which the fiscal imputation of premiums is voluntary, the imputation will be mandatory for the amount exceeding 100,000 euros per year per taxpayer and in respect of 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.

      However, in collective insurance policies 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 which determines that in these cases the imputation of 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 cessation of activity benefit for self-employed workers.

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 self-employed workers corresponding to the protective action of Social Security are considered work income fully subject to IRPF .

  1. Employment regulation files.

    The Temporary Employment Regulation File (ERTE) is regulated in article 47 of the Workers' Statute and can be used by companies that temporarily intend to reduce working hours or suspend employment contracts for all or part of their workforce in order to safeguard the viability of the company when there are economic, technical, organizational or production reasons or due to force majeure.

    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 that the affected workers will have to reduce their working hours for a certain period of time, either by reducing the hours of the daily working day or by reducing the number of working days per week.

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

    • ERTE for 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 not a dismissal in any case, 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 as they were before its application.

      During the time that the affected workers have their contract suspended, they will receive unemployment benefit .

    In 2022, the ERTEs linked to the health crisis caused by Covid-19 will end.

    However, in order to facilitate the transition to the new temporary employment regulation files of articles 47 and 47 bis of the Workers' Statute, the First Additional Provision of Royal Decree-Law 2/2022, of February 22 (BOE of February 23), established the automatic extension until March 31, 2022 the files referred to in article 1 of Royal Decree-Law 18/2021, of September 28, or that had been authorized based on the provisions of articles 2 and 5.1 of Royal Decree-Law 18/2021, of September 28, including those authorized in accordance with the sole transitional provision thereof, provided that they were in force on February 24, 2022.

  2. Extraordinary benefits for cessation of activity.

    These are extraordinary economic benefits due to the cessation or reduction of the economic activity of the self-employed as a result of the Covid-19 epidemic, which 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 cessation of activity regulated in articles 327 and following of the consolidated text of the General Social Security Law, approved by Royal Legislative Decree 8/2015, of October 30 ( BOE of October 31).

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

    These extraordinary benefits linked to Covid, as in the case of the ERTEs, expired on March 1, 2022. However, Articles 1 and 2 of Royal Decree-Law 2/2022, of February 22 ( BOE of February 23) establish, upon completion, the following aid measures for this group:

    • Exemptions from contributions in favour of self-employed workers who were receiving, on 28 February 2022, any of the benefits for cessation of activity provided for in articles 10 and 11 of Royal Decree-Law 18/2021, of 28 September, in terms similar to those provided in article 8 of said law, although its scope is specified for the months of March, April, May and June 2022, and the exemption percentages are set between 90 and 25 percent, depending on the month of its application (article 1 of Royal Decree-Law 2/2022).

      The exemption from the obligation to pay contributions for these amounts determines their lack of impact on personal income tax, since it does not correspond to any of the assumptions of obtaining income established in article 6 of the Personal Income Tax Law , nor does it therefore have the nature of full income or, correlatively, that of deductible expense for determining income.

    • The extraordinary benefit for cessation of activity for self-employed workers affected by the suspension of activity will be maintained as of March 1, 2022, which will have a maximum duration of four months, with the right to it ending on the last day of the month in which the lifting of the measures is agreed or on June 30, 2022, if this latter date is earlier (Article 2 of Royal Decree-Law 2/2022).