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V2620-23 27 September 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Disability allowance for children established in collective agreements is subject to Income Tax

A company has requested clarification on whether financial aid provided to employees with children with mental disabilities, as stipulated in a collective agreement, is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) has ruled that these benefits must be taxed as employment income.

The question raised

Whether said aid is exempt from Personal Income Tax (IRPF) for the employees.

The DGT's ruling

The economic aid received by employees in application of their collective bargaining agreement constitutes income from employment pursuant to Article 17.1 of the Personal Income Tax Law (LIRPF). As it does not fall under any of the cases of exempt income provided for in the law, such as Article 7, the benefit is subject to taxation and the withholding system.

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