6 October 2021.
Per diems paid on the payroll
To have a good understanding of thedefinition of the conceptwork-related allowancesis essential for any HR manager to avoid making mistakes when it comes to recording these concepts on the payroll. Below, we will look at some aspects that may be of interest to you:
1.- Per diems paid on the payroll, when are they considered exempt from contribution and taxation?
2.- Breakdown of types of expenditure falling into each category
3.- When the accommodation is not a hotel or tourist establishment
4.- Per diems regulated by collective bargaining agreement.
5.- Is it possible to pay subsistence allowances in contracts for specific works or services, and in permanent contracts for works?
6.- Per diems: they are not exempt after 9 months in the same destination.
7.- Per diems: partners and administrators
Per diems paid on the payroll, when are they considered exempt from contribution and taxation?
In order to be considered exempt, the amount of per diems reported on the payroll must compensate those expenses incurred by the worker for meals or accommodation as a consequence of carrying out his workoutside his or her usual place of work and away from his or her place of residence.
Article 23.2.a ofRD 2064/1995establishes the following requirements to be considered exempt from contributions:
- Displacement of the worker away from his or her usual place of work.
- Moving to a municipality other than that of your place of work and residence.
- Payment of amounts that do not exceed the limits and requirements established in the tax regulations.
Breakdown of types of expenditure falling into each category
- Complete diet. Including breakfast, lunch and dinner.
- Half-diet. This includes the cost of breakfast and lunch, or breakfast and dinner.
- Accommodation costs. In most cases this is not included in the daily subsistence allowance, unless otherwise stated in the collective agreement.
- Transport costsdepending on the means of transport used. If the employee travels by public transport, the company should pay the expenses incurred in the purchase of the tickets. If the journey is made by means of the employee's private vehicle, the company should pay the amount that compensates for the costs of petrol and wear and tear of the car, as well as expenses generated by tolls and parking.
When the accommodation is not a hotel or tourist establishment
It is common to find companies that prefer to rent flats, rather than hiring accommodation in hotel establishments, for the use and enjoyment of their displaced employees. If this is the scenario, we are dealing with remuneration in kind. Such remuneration is subject to withholding and contribution, for the value of the rent.
In order to be considered an exempt allowance, it is essential that the expenditure is made through a hotel establishment.
Per diems regulated by collective agreement.
The fact that the per diems are covered by the collective agreement does not mean that the amounts paid to workers can be considered exempt; for this to be the case, they must meet the established requirements and there must actually be a trip.
According to tax regulations (RD 439/2007), allowances are exempt from taxation provided that the company can prove the reality of the trip (date, reasons, place, etc.), provided that the trip does not exceed nine months, and provided that the amounts paid do not exceed the amounts established in art. 9.a.3, 4, 5 and 6 of RD 439/2007.
If the amounts established in the collective agreement exceed the above-mentioned amounts, the excess is taxed and, consequently, also pays social security contributions.
Is a per diem allowance payable in contracts for a specific project or service and in permanent contracts for a specific project?
In contracts for a specific work or service, per diems are not payable, since, in these contracts, the contracted work will be configured as the work centre, and the worker is hired from the beginning to provide services in that place, even if it does not coincide with the company's domicile.There is thus no travel cost to be compensated.
Per diems paid to permanent workers hired in the construction sector are not exempt either, even if the collective agreement provides for their payment (for the same reasons as indicated above). The only exception to this rule is if at some point the worker moves from the work centre where the site for which he/she was hired is located to other sites (provided that this occurs occasionally and not periodically).
daily subsistence allowance: not exempted after 9 months in the same place of employment.
Travel-related subsistence allowances exceeding 9 months shall be subject to deduction from the beginning of the travel.
To be taken into account:
- It must be a continuous movementcontinuousThis is understood to be continuous when it is to the same municipality continuously and does not include changes of municipality, even if they are without returning to the place of origin.
- Time for holidays, sickness or other circumstances not involving a change of assignment shall not be deducted.
- For a period ofnine monthsThe taxation of the subsistence allowance does not differ between tax years, so that a change of tax year does not prevent the taxation of the subsistence allowance from occurring.
Per diems: partners and administrators
In this respect, account should be taken of the limits established in Article 9 of the Personal Income Tax Regulation, which provides for exempt allowances only for taxpayers who receive income from work as a result of an employment relationship in which the characteristics of employment and dependence are present.
Therefore, taxpayers who do not have such an employment relationship, such as partners and directors, even though their remuneration constitutes employment income and travel expenses may be incurred, would not be subject to the system of exempt allowances provided for in the aforementioned article.
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