October 6, 2021.
Per diems paid on payroll
Knowing the definition of the concept of work allowances is essential for all HR managers and thus avoiding making mistakes when reflecting these concepts on payroll. Next, we are going to look at some aspects that may be of interest to you:
1.-Per diems paid on payroll, when are they considered exempt from contributions and taxation?
2.- Breakdown of types of expenses that fall into each category
3.- When the accommodation is not a hotel or tourist establishment
4.- Allowances regulated by collective agreement.
5.- Are allowances allowed in contracts for a specific work or service? and in fixed work contracts?
6.- Per diem: not exempt after 9 months in the same position
7.- Per diem: partners and administrators
Per diem paid on payroll, when are they considered exempt from contributions and taxation?
In order for the amount of per diem reported on payroll to be considered exempt, it must offset those expenses incurred by the worker for meals or accommodation as a result of carrying out his work outside his usual center or place of work and outside his residence address.
Article 23.2.a of RD 2064/1995 establishes the following requirements to be considered exempt from contributions:
- Travel of the worker outside his usual workplace.
- Travel to a municipality other than that of his workplace and that of his residence.
- Payment of amounts that do not exceed the limits and requirements established in the tax regulations.
Breakdown of types of expenses that fall into each category
- Full diet. Including breakfast, lunch and dinner.
- Half diet. In this case, it includes breakfast and lunch, or breakfast and dinner.
- Accommodation expenses. In most cases, these are not included in the diets, unless the collective agreement states otherwise.
- Transportation expenses, depending on the means used. If the employee travels by public transport, the company should pay the expenses incurred in the acquisition of the tickets. If the trip is made by means of the employee’s private vehicle, the company must cover the amount that compensates for the cost of gasoline and wear and tear on 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 apartments, instead of hiring accommodation in hotel establishments, for the use and enjoyment of their displaced employees. If this is the scenario, we are faced with compensation in kind. This compensation is subject to withholding and contributions, for the value of the rental.
To be considered an exempt diet, it is essential that the expense is made through a hotel establishment.
Diets regulated by collective agreement.
The fact that the diets are contemplated in the collective agreement does not imply that the amounts paid to the workers can be considered as exempt; for this, they must comply with the established requirements and there must actually be a transfer.
According to the tax regulations (RD 439/2007), the diets are exempt from taxation provided that the company can prove the reality of the transfer (its date, the reasons, the place, etc.), provided that said transfer 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 amounts indicated above, the excess is taxed and, consequently, also pays Social Security contributions.
Are diets payable in contracts for a specific work or service? And in fixed work contracts?
In contracts for a specific work or service, the payment of allowances is not possible, since, in these contracts, the contracted work will be configured as the work center, with the worker being hired from the beginning to provide services in that place, even if it does not coincide with the company’s address. Thus, there is no displacement whose cost must be compensated.
The allowances paid to permanent construction workers hired in the construction sector are also not exempt, even if the agreement provides for their payment (for the same reasons indicated above). The only exception to this rule is contemplated if at any time the worker moves from the work center where the work for which he was hired is located to other works (provided that it occurs occasionally and not periodically).
Allowances: they are not exempt after 9 months in the same destination
Allowances for maintenance related to displacements that are longer than 9 months must be subject to withholding from the beginning of the displacement.
Please note:
- It must be a continuous displacement, understood as continuous when it is to the same municipality continuously and not counting the changes of municipality, even if they do not return to the place of origin.
- Vacation time, illness or other circumstances that do not imply a change of destination will not be discounted.
- For a period of nine months, without distinguishing between fiscal years, so that a change of fiscal year does not prevent the taxation of maintenance allowances from occurring.
Allowances: partners and administrators
In this respect, the limits established in art. 9 of the Personal Income Tax Regulations should be taken into account, which provides for exempt allowances only for taxpayers who receive work income due to an employment relationship in which the characteristics of alienation and dependency are given.
Therefore, taxpayers who do not have such an employment relationship, such as partners and administrators, despite the fact that their remuneration constitutes work income and travel expenses may be incurred, the exempt allowance regime provided for in said article would not apply to them.
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