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V3257-15 23 October 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · imputación fiscal

Excess remuneration transferred to savings bank is subject to Corporate Tax

A query was raised regarding the tax treatment of allowances that a director must transfer to their savings bank upon exceeding legal limits. The Directorate General for Taxes (DGT) ruled that these excesses do not constitute income for the individual under Personal Income Tax, but rather constitute income for the entity under Corporate Tax.

The question raised

What is the criterion for the tax imputation of allowances paid to a natural person? What is the correct treatment regarding the obligation to perform withholdings on account of the portion of the allowance that is not imputable to the natural person?

The DGT's ruling

Income that members of governing bodies must reimburse to the savings bank for exceeding legal limits is not considered income for the taxpayer under Personal Income Tax (IRPF). The recognition of income occurs within Corporate Tax for the receiving entity. Therefore, the portion of the allowance that must be reimbursed is subject to withholding as a payment on account of Corporate Tax.

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