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V2301-19 5 September 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rentas en especie

Company-paid nursery expenses may be exempt if agreed as benefits in kind

An employee inquired whether direct payments made by a company to a nursery for childcare expenses are exempt from Personal Income Tax (IRPF). The Directorate General for Tax (DGT) ruled that if such payment is established as a benefit in kind within the employment contract or collective agreement, the exemption applies.

The question raised

Application of the exemption provided in Article 42.3 b) of the LIRPF.

The DGT's ruling

If the payment to the nursery is a mere mediation of payment of a monetary remuneration, it is not in-kind income. However, if the service is agreed upon in the contract or collective agreement as in-kind remuneration, the direct payment to third parties constitutes such income. In this latter case, the exemption provided in Article 42.3 b) of the LIRPF applies, being irrelevant whether the contract was made by the company or the employee.

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