Income tax exempt allowances: the keys to knowing your obligations

Do you have to pay tax on your travel expenses and are your per diems exempt from income tax? In some cases, this amount, which complements the regular salary, will be exempt from taxation, as the Tax Agency explains in the paragraph 7.2.1.2 from Model 100. But what are these cases, and how can you make sure that you are complying with your tax obligations?

Travel expenses: per diems exempt from personal income tax

If you need to commute to work every day and it is part of your daily routine to leave the factory, the workshop or your workplace, you should know that, the amounts you receive from your employer to compensate you for the expenses generated by these transfers are most likely to be per diems exempt from personal income tax.

Although these travel expenses are not exempt from taxation in all cases, there may be some circumstances that may arise that exempt their holders from tax liability. In particular, this is what happens when:

• It is about justifiable expenses by means of a ticket, invoice or equivalent document, issued by a public transport company.
• Public transport has not been used, but the proof of travel expenses submitted does not exceed EUR 0,19 per kilometre travelledThis is the sum of costs related to the journey itself, plus those associated with tolls and parking, if any.

Income tax exempt allowances 2017 in relation to subsistence and subsistence expenses

The exemption from the levy in this case has a temporary component. to be taken into account. It is the one that determines the 9-month deadline. If the stay is longer than this, the amounts allocated by the undertaking to compensate for subsistence and living expenses will not be considered as personal income tax exempt allowances in 2017 and will be taxable from day one.

If the stay does not exceed these nine months, the worker who receives it is not obliged to pay tax on this concept.

In this respect, it should be borne in mind that, within that time limit:

• Time spent on leave shall not be deducted, nor shall time taken off work due to illness or any other circumstance that does not involve a change in the employee's assignment.
• When taxed under this heading, “the payer must provide evidence of the day and place of travel and the reason or motive for travel”.

In order to be able to assume the corresponding tax obligations in cases where the situation does not allow to speak about per diems exempt from personal income tax, it is necessary to understand what are considered “normal living and subsistence expenses”.”. For the law, this is considered to be the equivalent of, as 53.34 per day on national territory or 91.35 per day on foreign territory if an overnight stay is included. And, in cases where only maintenance is involved, the maximum is set at 26.67 euros per day within our borders and 48.08 euros per day abroad.

The Tax Agency establishes certain exceptions to allowances exempt from personal income tax. mentioned. These are listed in the section “...".“special rules”and which apply to:

•  Airline flight crew
• Staff posted abroad
• Mobile or itinerant workplaces
• Special dependent employment relationships
• Relocation of the workstation
•  Members of the jury
• Members of polling stations
• Members of representative institutions

Who is obliged to justify allowances exempt from personal income tax, employee or employer?

Although until not so long ago it was the employees of each organisation who had to keep the means of proof, nowadays it is the employees of each organisation who have to keep the means of proof, the burden of justifying income tax-exempt allowances rests with your employer.

Although the company may require each employee to collect the receipts, keep the invoices and not lose the supporting documents, in the event of a tax audit carried out at the request of the authorities, it is the person responsible for the business who is liable. It is up to him/her to prove:

1. That there are documents justifying these per diems exempt from personal income tax.
2. That these documents are complete and include the minimum data required by law (such as date, amount and place of issue).
3. That the amount of the allowance is exempt from the payment of tax and therefore complies with the applicable legal precepts.

Article 9 of the Personal Income Tax Regulations (Royal Decree 439/2007) recognises the employer as the subject of tax verification. Although the employer was already responsible for all matters relating to the administration or formalities relating to income tax exempt allowances, The difference now is that if there is a management error and, as a result, the accounts shared with the tax office are flawed, it will have to respond.

For example, if no documentary proof of a payment can be found or if the amounts declared do not add up.

It is important to note that the requirement to retain vouchers does not extend to the employee, therefore, Every company should find a way to optimise the management of such documents.

Considering the number of hands that each ticket or invoice passes through before it is properly processed and recorded, it is easy to guess that the propensity for human error is high.

To avoid tax problems, the management of these budget items needs to be carefully managed and one way of doing this, by simplifying the company's accounting, is through the use of solutions such as Ticket Restaurant.

This card, which can be associated with a cardholder and on which it is possible to set a limit, automates data collection and can only be used during working hours and for the purpose approved by the company.

It is a resource that contributes to the verification of personal income tax exempt allowances The company's commitment to the company and the comfort of its staff's day-to-day work.