Personal Income Tax (IRPF) withholding on travel allowances for amateur players

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the tax treatment of amounts paid for travel expenses to amateur players in sports entities. The central issue lies in determining whether these payments should be subject to Personal Income Tax (IRPF) withholding.

What the DGT has ruled

The administration has ruled that economic compensations granted to amateur players are classified as income from employment, as they derive from the provision of personal services. In this scenario, the exemption regime applicable to per diems (dietas) does not apply, since there is no formal employment or statutory relationship between the club and the player.

The ruling specifies that if the club does not directly provide means of transport and opts to reimburse expenses instead, it must prove that such amounts strictly compensate for the travel. If this proof is not provided, the amount is considered taxable income subject to tax and withholding. The applicable withholding rate will be determined through the general procedure or, if the relationship lasts less than one year, the minimum rate of 2% will be applied.

What this means for you

This ruling has a direct impact on two profiles:

• Sports entities and clubs: They must evaluate the nature of the payments they make to their amateur players. If expense reimbursements are made without proper justification that they exclusively compensate for travel, the entity is obliged to apply the corresponding withholding.
• Amateur players: Those receiving these compensations may be required to pay tax on these amounts as employment income in their tax returns.

What should be done

Given this situation, it is necessary to analyze how travel is managed within sports entities. It is fundamental to distinguish between the direct provision of transport and the reimbursement of expenses. It is recommended to document and accurately prove that any amount provided responds exclusively to the compensation of travel expenses to prevent the entire amount from being considered taxable income. Each situation must be analyzed individually to determine the appropriate tax treatment according to current regulations.