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V2301-14 8 September 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Remuneration for Board of Directors members is taxed as employment income

An association has requested clarification on whether remunerations paid to its Board of Directors for their dedication and compensation should be taxed, and which withholding rate applies. The Directorate General for Taxes (DGT) has ruled that these payments constitute employment income and has specified the applicable withholding rate.

The question raised

Legal classification to be assigned to the remuneration received by the members of the Board of Directors of the requesting Association.

The DGT's ruling

Remuneration for the performance of duties by members of the Board of Directors is considered income from employment pursuant to Article 17.2.e) of the Personal Income Tax Law (LIRPF). The applicable withholding tax rate is 35 percent, although this increases to 42 percent for the tax periods 2012, 2013, and 2014 according to the thirty-fifth additional provision of the law.

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