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V2214-20 30 June 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Volunteer compensation may be classified as employment income and subject to Income Tax

An association inquired whether financial compensation provided to volunteer musicians and conductors for transport and subsistence expenses was exempt from tax. The Directorate General for Taxes (DGT) ruled that these amounts constitute employment income and cannot qualify for tax-exempt meal and travel allowances because no formal employment relationship exists.

The question raised

Tax treatment in the Personal Income Tax (IRPF) of said economic compensations.

The DGT's ruling

Compensations for volunteer work are considered income from employment pursuant to Article 17.1 of the Personal Income Tax Law. The regime of tax-exempt allowances under Article 9 of the Regulations applies only to employees under a labor or statutory relationship. If the association directly provides means of transport or accommodation, no income is generated. If expenses are reimbursed without proof that they strictly compensate for travel, or if amounts are paid for free allocation, they are considered employment income subject to taxation.

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