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V2581-14 2 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IRPF · rendimientos del trabajo

No income if the entity provides transport and accommodation; reimbursements without proof of expense are treated as employment income

A query was raised regarding whether travel payments to members of a Board of Directors constitute employment income or entity expenses. The DGT ruled that no income arises if the entity provides the means directly; however, if expenses are reimbursed without proof of their necessity for the role, they are considered taxable remuneration.

The question raised

1) What would be the classification of the income paid to the members of the Board of Directors that compensates for travel expenses, in some cases proving the expense and in others not, as well as the withholding rate applicable to each case.

The DGT's ruling

If the entity directly provides transport and accommodation, there is no income for the members as there is no particular benefit. If the entity reimburses expenses without proving that they strictly compensate for the travel necessary for their functions, or pays amounts for the free choice of means, it is considered monetary income subject to withholding. For the expense to be deductible for Corporate Income Tax purposes, it must comply with accounting registration, accrual, correlation of income and expenses, and documentary justification.

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