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V1348-19 10 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rentas en especie

Interest-free salary advances repayable in instalments constitute benefits in kind

A member of the Armed Forces enquired whether interest-free advances from Army Social Action, repayable via payroll, constitute benefits in kind. The Directorate-General for Taxes (DGT) ruled that, as they are repayable in several instalments, they constitute a benefit in kind due to the advantage of the interest-free loan.

The question raised

Possible consideration of said advances as benefits in kind.

The DGT's ruling

Advances on work already performed that are reimbursed on the scheduled payment date do not constitute income in kind. However, if the advance is reimbursable in several monthly installments, the difference between the interest paid and the legal interest rate constitutes income from work in kind. Said income shall be valued by that difference and settled through withholding tax.

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