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V0551-20 6 March 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Payments for providing tutoring classes are considered employment income subject to withholding tax

A consortium enquired whether amounts paid to former students for providing school tutoring to compensate for travel and subsistence expenses were subject to Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that, as these are lump-sum amounts to compensate for time commitment, they constitute employment income.

The question raised

Subject to Personal Income Tax withholding.

The DGT's ruling

Amounts paid for teaching courses or similar classes are classified as income from employment pursuant to Article 17.2.c) of the Personal Income Tax Law. The regime for tax-exempt per diems does not apply because there is no employment relationship characterized by subordination and alterity. As it is a lump-sum amount where the beneficiaries decide how to allocate it, it is considered monetary income. The applicable withholding rate is 15% in accordance with Article 80.1.4 of the Tax Regulations.

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