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V0574-14 5 March 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retribuciones en especie

Remuneration in kind must be agreed in the contract or collective agreement to avoid being classified as mere mediation of payment

The inquirer asks whether the employment contract or collective agreement must be amended to apply the rules governing remuneration in kind. The Directorate-General for Life and Employment (DGT) responds that, for a company's payment to a third party to constitute remuneration in kind rather than mere mediation of payment, it must have been previously agreed upon in the contract or collective agreement.

The question raised

Whether a modification of the employment contract or the collective agreement is necessary for the application of the rules provided in Article 42 of the Personal Income Tax Law regarding in-kind remuneration.

The DGT's ruling

If the company pays a third party on behalf of the employee, it constitutes a payment mediation and not in-kind remuneration. For payments to third parties to be considered in-kind remuneration, there must be a prior commitment in the employment contract or collective agreement that obligates the company to provide said good, right, or service. In that case, the rules of Article 42 of the Personal Income Tax Law shall apply.

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