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Practical Income Manual 2023.

Article 38 ter LIS "Deduction for business contributions to corporate social security systems"

Note: Article 38 ter of the LIS has been added by the fifth Final Provision of Law 12/2022, of June 30, regulating the promotion of employment pension plans, by which modifies the consolidated text of the Law on the Regulation of Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29 ( BOE of July 1) .

For Personal Income Tax taxpayers , the third Additional Provision of Royal Decree-Law 13/2022, of July 26, which establishes a new contribution system for self-employed or self-employed workers and protection for cessation of activity is improved ( BOE of July 27), specifically that, with effect from January 2023, self-employed people with dependent workers will be able to practice this deduction under the terms and conditions provided for in article 68.2 of the Personal Income Tax Law .

Article 38 ter of the LIS regulates the deduction for business contributions to corporate social security systems, which is applicable for the first time in this fiscal year 2023 .

Requirements for applying the deduction

Taxpayers may apply this deduction when the following requirements are met

  • Having made business contributions to social security systems attributed to their workers.

  • Such business contributions in favor of these workers must be made specifically to one of the following social security systems:

    • Employment pension plans

    • Business social security plans

    • Pension plans regulated by Directive ( EU ) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of pension funds employment

    • Social security mutual funds that act as an instrument of social security of which the taxpayer is the promoter

See in chapter 13 the section related to “ Reductions for contributions and contributions to social security systems ”.

Deduction amount

To determine the total deductible amount, you must differentiate between:

  • Imputed business contributions in favor of workers with gross annual salaries of less than 27,000 euros: In this case, a deduction of 10% of such contributions may be made.

  • Imputed business contributions in favor of workers with gross annual salaries equal to or greater than 27,000 euros: In this case, the deduction to be made will be the result of applying the percentage of 10% on the proportional part of the imputed business contributions that correspond to the amount of the annual gross remuneration outlined in the previous point.

Example

Don JMAZ  develops an economic activity whose net return is determined by the direct estimation method.

Its staff is 4 people employed. One of them receives a gross annual remuneration of 41,800 euros and the other three receive gross annual remuneration of less than 27,000 euros.

During 2023, it has contributed to an employment pension plan the following amounts in favor of its workers (which have been attributed to them as work performance in kind):

  • The worker with gross annual remuneration of 41,800 euros: 2,500 euros

  • Workers with gross annual salaries of less than 27,000 euros: 2,000 euros (each)

Determine the amount of the deduction for business contributions to corporate social security systems that should be applied in fiscal year 2023.

Solution :

  1.  For workers with gross annual salaries of less than 27,000 euros

    10% s/ (€2,000 annual contribution x 3 workers) = 600 euros

  2. For the worker with gross annual remuneration of 41,800 euros

    10% s/ [(27,000 ÷ 41,800) x 2,500 annual contribution] = 161.48 euros

Total to deduct (600 + 161.48) =761.48