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V0640-19 26 March 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retribución en especie

Company payment of self-employed contributions treated as benefits in kind, affecting income tax withholding

A shareholder inquired whether the company's payment of their self-employed social security contributions (RETA) constitutes a benefit in kind. The Directorate General for Taxes (DGT) ruled that it does indeed constitute a benefit in kind and explained how it must be integrated into the calculation of Personal Income Tax (IRPF) withholding.

The question raised

Withholding rate applicable to said remuneration.

The DGT's ruling

The RETA contributions paid by the company to the partner are classified as remuneration in kind. To calculate the withholding rate, these contributions must be added to the total amount of remuneration and, subsequently, that amount must be reduced in accordance with Article 83.3.b of the RIRPF. The withholding amount shall be determined by applying the obtained withholding rate to the amount of the contributions paid by the entity.

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