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V1695-22 15 July 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Temporary disability benefits are considered employment income and mutual insurance contributions may be deductible

A taxpayer on temporary disability benefits inquired about the classification of these benefits and whether the RETA social security contributions paid by their mutual insurance company are deductible. The Directorate General for Taxes (DGT) ruled that such benefits constitute employment income and that the payment of contributions by the mutual insurance company is a deductible expense for the economic activity.

The question raised

Classification of the remuneration received and the possibility of deducting RETA contributions

The DGT's ruling

Social Security benefits for temporary disability are classified as income from employment pursuant to Article 17.2.a)1 of the Personal Income Tax Law (LIRPF). The income includes the amount of RETA contributions paid by the collaborating mutual insurance company. This payment of contributions constitutes a deductible expense for determining the net income of the economic activity under the direct estimation method, as it is a necessary expense for the activity.

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