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V1092-20 28 April 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Local authority social grants taxed as employment income, except for specific health assistance

A civil servant has enquired whether local authority grants for studies, eyewear/prosthetics, and large families are subject to income tax (IRPF) withholding. The Directorate General for Taxes (DGT) has ruled that most are taxable, with the exception of health grants that cover expenses not provided for by the National Health Service.

The question raised

Whether such aid is subject to withholding tax for Personal Income Tax.

The DGT's ruling

Financial aid for glasses, prostheses, or similar items is not taxable if it is intended for the restoration of health and covers expenses not covered by the Health Service or Mutual Fund. Study grants for employees and their children are taxed as income from employment as they are not general public grants. Large family allowances are also taxable as they are granted by a City Council to a specific group, which prevents the application of exemptions for public benefits.

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