Deductibility of social security contributions for special internship agreements in Personal Income Tax

The Directorate General of Taxes (DGT) has issued a relevant ruling for individuals who opt to enter into special agreements with the Social Security. The purpose of these agreements is to count internship periods toward retirement, which involves paying contributions whose tax treatment in Personal Income Tax (IRPF) has now been clarified.

What the DGT has ruled

The query concerned whether the amounts paid to the General Social Security Treasury, derived from entering into a special internship agreement, can be considered a deductible expense. The DGT has ruled that these contributions constitute deductible expenses from gross employment income, in accordance with current regulations.

However, the administration has specified that the temporal allocation of this expense must be made in the tax period in which the amounts become due. This factor depends directly on the payment method chosen by the taxpayer when formalizing the agreement:

• Single payment: If this modality is chosen, the entire contribution is allocated as an expense in the year the agreement is signed.
• Installment payments: In this case, deductibility will apply as the quotas become due in each tax year.

What it means for you

If you have entered into a special agreement so that your internship periods count toward your future retirement, these amounts should not be considered a cost without a tax return. As a deductible expense, it will reduce the taxable base of your employment income, which directly impacts the calculation of your gross tax liability.

It is essential to correctly identify the moment the debt to the Social Security becomes due to avoid errors in your tax return. The choice between a single payment or installments affects not only immediate liquidity but also the fiscal year in which you can apply the deduction.

What you should do

When formalizing this type of agreement, it is necessary to analyze the tax burden that each payment option will entail. You should verify whether the full deduction in a single tax year through a single payment is more beneficial than distributing the expense over several years through installment payments. It is recommended to assess each particular situation to ensure that the allocation of expenses complies with the regulations of the IRPF Law and Order ISM/386/2024.