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V0103-19 16 January 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento neto

Wages paid to an adult child working in a parent's business are tax-deductible

A query was raised regarding whether remuneration paid to a child acting as a collaborator in their mother's business is deductible. The Directorate General for Taxes (DGT) ruled that such payments are deductible as expenses, provided they meet the requirements of being justified and directly correlated with income generation.

The question raised

Classification for Personal Income Tax (IRPF) of the remuneration to be received by the son.

The DGT's ruling

Wages paid to the son for his work under a dependency regime are a deductible expense for determining the net income of the activity. For deduction purposes, the expense must be linked to the activity, comply with correct temporal imputation, be recorded in the accounting records, and be appropriately justified. The son will have full employment income for the amounts received as he does not carry out economic activity on his own account.

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