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V1783-19 11 July 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Self-employed contributions for management roles are deductible as employment income expenses

A CEO contributing to the Self-Employed Regime has enquired whether her Social Security contributions are deductible for Personal Income Tax (IRPF) purposes. The Directorate General for Taxes (DGT) has ruled that, as these relate to management functions, such contributions are considered a deductible expense when determining net employment income.

The question raised

Whether the contributions paid to Social Security would be deductible as an expense against employment income.

The DGT's ruling

Management functions in a commercial entity are classified as income from employment pursuant to Article 17.2.e) of the Personal Income Tax Law (LIRPF). Therefore, social security contributions to the Self-Employed Regime for the performance of duties as a managing director are deductible expenses in accordance with Article 19.1 and 19.2.a) of the Personal Income Tax Law. These contributions may generate negative income if there are no total earnings exceeding the amount of the contributions.

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