The amounts paid by employers to compensate normal lodging expenses (living and accommodation) in restaurant, hotels and other hospitality establishments are exempt from Spanish Personal income tax and, hence, are not subject to Payroll withholding tax when, between other requirements, they derive from the secondment to a municipality different from that of the employee’s habitual place of work and of habitual residence.

In the event of telework, the General Directorate of Taxes (GDT) reminds us that the lodging expense must be due to the employee’s secondment, for labour reasons, from his habitual residence to a municipality different from that where his centre of work is located.

✔ In its resolution CV 2553 -19 of 09 September, the Spanish GDT analyses the case of a company that employs several commercial and technical workers that frequently travel to the clients’ premises. In their labour contracts, it is established that they will remotely render their services from their permanent homes, from where they start or to where they finish their business trips. Such employees are assigned to the company’s centre of work, although they do not usually attend it but only occasionally for group meetings or to render a specific service.

✔ The employer company asks the GDT if the amounts paid to cover lodging expenses are exempt from Spanish Personal income tax, if the employee travels from his permanent home, due to working reasons, to a different municipality.

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✔ It must be noted that the Personal income tax regulations determine that the amounts paid by employers due to the employees’ secondment to a municipality different from that of their permanent work or their permanent residence are tax – exempt and not subject to Payroll withholding tax providing that the following requirements are met:

  • The amounts try to compensate lodging expenses in hospitality establishments.
  • The employee remains for a period not exceeding nine months in each of the different municipalities.
  • The amounts paid do not exceed the limits established in the Spanish Personal income tax rules.

✔ The Spanish GDT concludes that only lodging expenses shall be tax – exempt if the employee travels from his permanent residence, due to labour reasons, to another municipality, providing that this latter is different from the one where the centre of work is located.

✔ On the contrary, if the allowance is paid due to the employee travelling from his permanent home to the assigned centre of work, to celebrate a working meeting or to render a service, will not be tax – exempt.


Publicado el 03-2020 por PBS