A taxpayer carries on a business and calculates its net income under the objective assessment method. Three employees work in the business, and a fourth worker is hired to cover their holidays. The taxpayer is considering hiring this worker through a temporary employment agency. Is this worker included when calculating the business’s net income?
An employee is any person who works in the business, except for the business owner and their spouse, and any dependent minor children living with them who, despite working in the business, are not treated as employees.
However, this definition must be understood to mean that people working in the business must be integrated into it in a relationship of dependency on the business owner.
Such a relationship of dependency exists when the business owner hires staff through a temporary employment agency: those workers become part of the business owner’s organisation under the objective assessment method, and the owner directs their work.
Accordingly, these workers must be treated as employees when calculating net income for IRPF purposes and the VAT liability on current transactions under the simplified VAT scheme.
The module is quantified under the rule set out in the relevant instruction: one employee corresponds to the annual working hours per employee established by the applicable collective agreement or, if there is no agreement, 1,800 hours per year. If the temporary worker’s annual hours are lower or higher, the employee figure is calculated in proportion to the hours actually worked compared with the hours set by the collective agreement or, failing that, 1,800 hours.
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