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V0856-14 27 March 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Supplementary unemployment benefits paid by a local council constitute employment income

A query was raised regarding whether the supplementary payment made by a local council to an unemployed person to match their benefit constitutes employment income. The Directorate General for Taxes (DGT) ruled that such an amount is classified as personal employment income and is subject to withholding tax.

The question raised

Tax treatment under Personal Income Tax regarding the remunerations paid. Withholding on account of Personal Income Tax.

The DGT's ruling

The remuneration paid by the City Council to the unemployed worker to supplement their benefit has the nature of income from personal work. Therefore, it is subject to withholding or payment on account of Personal Income Tax (IRPF). The withholding rate shall be calculated according to the general procedure set forth in Articles 82 to 88 of the Personal Income Tax Regulations.

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