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V0335-19 15 February 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · estimación directa

Social Security contributions are deductible for Income Tax if allocated to the period in which they accrue

An electrical installations professional inquired whether they could deduct Social Security contributions from previous years following a Labour Inspection ruling. The Directorate-General for Taxes (DGT) ruled that these are deductible provided they meet the requirements of correlation with income and are allocated to the tax year in which they become due.

The question raised

Whether the Social Security contributions payable according to the settlement certificate dated November 18, 2018, corresponding to the fiscal years 2014, 2015, 2016, 2017, and 2018, are deductible.

The DGT's ruling

Social Security contributions borne by the company are deductible for Personal Income Tax (IRPF) purposes in the calculation of the net income from economic activity. Under the direct estimation method, these expenses must be attributed to the tax period in which they accrue, in accordance with Corporate Tax regulations. Therefore, contributions are attributable to the fiscal year in which they become due to Social Security. If the taxpayer considers that these deductions were not applied in previous years, they may request the rectification of their tax returns.

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