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A query was raised regarding whether amounts reimbursed by a company to an employee to fund their special Social Security agreement during a leave of absence should be subject to Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that these amounts constitute employment income and are subject to tax withholding.
Companies reimbursing Social Security costs for employees on leave must treat these payments as taxable employment income and apply the corresponding tax withholdings.
The tax team reviews your specific situation.
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