Tax treatment of self-employed contributions paid by a company to a shareholder

A recent binding ruling from the Directorate General of Taxes (DGT) has clarified the tax treatment of Social Security contributions (RETA) when a company pays them on behalf of a shareholder. This scenario raises doubts regarding the nature of said payment and its correct integration into the company's withholding obligations.

What the DGT has ruled

The tax authority has determined that the payment of RETA contributions made by the company to the shareholder constitutes remuneration for work, whether in-kind or in cash. Therefore, this amount is not an expense external to the employment or corporate relationship, but rather forms part of the beneficiary's remuneration.

Regarding the management of withholdings, the DGT points out that to calculate the base for the withholding rate, these contributions must be added to the total amount of remuneration for work. However, in accordance with Article 83.3.b of the Personal Income Tax Regulation (RIRPF), these contributions must reduce the total amount of remuneration for the final calculation. Finally, it establishes the obligation for these amounts to be expressly stated in Form 190 for withholdings.

What this means for you

If you are a shareholder of a company that assumes the cost of your self-employed contribution, you must take into account that this benefit has a direct impact on your Personal Income Tax (IRPF) return. The company cannot treat this payment as an external operating expense, but as part of your remuneration. This implies that the amount will affect the calculation of the withholdings that the company must apply monthly.

What you should do

It is necessary to ensure that accounting and payroll management correctly reflect this concept. The company must include the RETA contributions paid to the shareholder as in-kind or cash remuneration in Form 190 to comply with current regulations. Since the integration of these contributions affects the calculation of the withholding base, it is recommended to assess the particular situation of each corporate structure to guarantee the correct application of the RIRPF and the General Tax Law.