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Cases of exclusion as income from work in kind for personal income tax purposes

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If the company grants to its employees the use for the performance of their work, of a cell phone and its accessories or other items. It could be excluded from the performance in kind if it has a code of conduct prohibiting the private use of such work tools.


And even better if it is individually stated in the contractual clauses included in the employment contracts.


According to article 17 of Law 35/2006, of November 28, on Personal Income Tax and partial amendment of the laws on Corporate Income Tax, Non-Resident Income Tax and Wealth Tax (BOE of November 29), all considerations or profits, whatever their denomination or nature, in cash or in kind, which derive, directly or indirectly, from personal work or from the employment or statutory relationship and which are not in the nature of income from economic activities, shall be considered as full income from work.

On the other hand, Article 42.1 of the same law provides that "income in kind is constituted by the use, consumption or obtaining, for private purposes, of goods, rights or services free of charge or at a price lower than the normal market price, even if they do not involve a real expense for the person granting them". To this it adds in a second paragraph that "when the payer of the income delivers to the taxpayer amounts in cash for him to acquire the goods, rights or services, the income will be considered as monetary".


The case of the assignment of goods in favor of the employee:

In general terms that there is no remuneration in kind when the company makes available to the employee the machines, useful and tools of property or ownership of the company necessary for him to perform his work.

The non-existence of work performance must be affirmed not only in the case that the provision to the worker of the referred means (machines, tools and implements) takes place in the premises of the company, but also when the worker renders his services outside such premises, as it happens when he performs his work in his own home in the cases of teleworking, or in the home of the clients of the company.

On the other hand, and also in general terms, it must be taken into account that the use, consumption or obtaining for particular purposes of the employee of those means: machines, tools and implements, etc., may constitute work income in kind, in accordance with the aforementioned article 42.1 of the Tax Law.


Having established the above and moving on to the analysis of the specific case, it should be pointed out that it will be the nature of the tool assigned by the company to its employees -for example: mobile telephones and their accessories, as well as other elements of similar and analogous characteristics- and their indubitable connection with the performance of the work activity, taking into account the circumstances, which will determine whether or not such assignment derives in the existence of work performance in kind. In this sense, the codes of conduct and the clauses in the contracts help to qualify the non-existence of work income in kind.


Josep Navarro's picture
Josep Navarro es Licenciado en Económicas por la UB, especializado en Inspecciones Tributarias, con más de 25 años de experiencia en asesoría fiscal para empresas y particulares en España.