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V1110-17 10 May 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · dietas

Trustee allowances may be subject to 35% or 19% withholding if they do not qualify as strict compensatory expenses

A foundation has requested clarification on whether travel and meeting allowances paid to its trustees are subject to tax withholding. The Directorate General for Taxes (DGT) has ruled that if it cannot be proven that these payments strictly compensate for actual expenses, or if a fixed lump sum is paid, they are considered employment income subject to withholding tax.

The question raised

Whether these per diems are subject to withholding tax, and if so, which withholding rate should be applied.

The DGT's ruling

The regime for tax-exempt per diems does not apply to foundation representatives due to the absence of an employer-employee relationship. If the foundation provides the means (transportation or accommodation), there is no income. If it reimburses expenses without proving their strictly compensatory nature or pays lump sums, it constitutes employment income. Such earnings are classified as remuneration for administrators and members of representative bodies, subject to a withholding tax of 35% or 19% if the turnover is less than 100,000 euros.

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