The concept of per diem allowances in Spain, particularly their work and taxation processing, can cause confusion and doubts when implementing them in the company.
Per diem allowances in Spain are non-wage benefits aimed at compensating employees for their breakfast, lunch, dinner and accommodation expenses. The amounts of these allowances are exempt from Social Security and tax payments, provided they do not exceed the limits established.
Allowances for employees arise when they have to temporarily work in a different municipality to that in which their work centre is located. That situation entails employees incurring a number of additional expenses that the company has to cover through payments of the corresponding per diem allowances.
The amount the company has to pay the employee on such occasions is established in the applicable Collective Bargaining Agreement. If that is not the case, the amounts may be regulated by the internal regulations of the company. If neither of those are applicable, the company must pay all of the justified expenses entailed in the employee’s trip.
The social security and tax payments relating to the expenses that employees may incur in travelling outside of the municipality in which their work centre is located are regulated, where appropriate, by Article 9 of the Regulation on Personal Income Tax and by Article 147 of the General Law on Social Security.
The accommodation expenses that are incurred and justified by the employee are exempt from social security and tax payments.
Limits
Subsistence expenses are exempt from social security and tax up to the following limits:
| Subsistence | Exempt amount | Amount subject to tax | ||
| Subsistence expenses | Overnight | Spain | €53.34 | Excess amounts subject to SS and tax payments |
| Abroad | €91.35 | |||
| Not overnight | Spain | €26.67 | ||
| Abroad | €48.08 | |||
When employees use public transport or car parks, pay tolls or have expenses relating to transportation, they will be exempt from social security and tax payments, provided that evidence of such expense is provided by means of invoices or receipts.
When employees use their own vehicle to travel for work, the company must cover the expense. In this case, €0.19 per km are exempt from social security and tax payments.
To effectively control per diem allowances in Spain and to save time, the company has to implement a management tool adapted to the internal functioning of the company.
Summary
If the company implements an appropriate model that respects the labour and fiscal regulations in force, not only will it save on costs, but it will also receive fiscal benefits. Another important factor is that employees will also benefit from these advantages, which is also a way to improve the work environment.
Soledad Moriche
