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V2863-23 25 October 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

The 600 euro award for academic merit is taxed as employment income and is not exempt

A foundation asks whether an award for the best high school academic record (which includes 600 euros, tuition, and accommodation) is exempt from Personal Income Tax (IRPF). The DGT determines that the 600 euro financial aid is taxed as employment income, whereas tuition and accommodation could be exempt if scholarship requirements are met.

The question raised

Question posed: Whether the amount of said awards is exempt from Personal Income Tax (IRPF). In the event they are not exempt, whether the withholding calculation must be carried out in accordance with the general procedure provided for in Article 82 of the IRPF Regulations, potentially applying the 2% minimum withholding rate in such case, or conversely, whether the 15% fixed rate established for literary, artistic, or scientific awards or another regulated fixed rate must be applied.

The DGT's ruling

The 600 euro aid is not exempt because enrollment is not a condition for obtaining the award, thus qualifying as employment income subject to withholding under the general procedure. The 30% reduction and the 2% minimum rate do not apply as it is neither notoriously irregular income nor a seasonal relationship. Conversely, the payment of tuition and accommodation could be exempt as a scholarship for formal studies if the foundation meets the requirements of a non-profit entity and the principles of merit, capacity, and competitive selection are fulfilled.

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