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V1624-18 11 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Payments under an employment contract are not exempt as research grants

A consultant inquired whether pre-doctoral training aid received from a university is exempt from Personal Income Tax (IRPF) as a grant. The Directorate General for Taxes (DGT) ruled that, because an employment contract was formalised, the payments do not constitute grants and must be taxed as employment income.

The question raised

Whether the income received by way of said aid is considered exempt from taxation through the application of Article 7 j) of the Personal Income Tax Law.

The DGT's ruling

Amounts paid within the framework of an employment contract are not considered scholarships. Scholarships are characterized by not being salary or consideration, which is incompatible with the existence of an employment contract. Therefore, amounts received under an employment contract must be taxed as employment income and are subject to withholding.

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