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Practical manual for Income Tax 2020.

General rule of valuation and entry on account

General rule of valuation

Regulations: Art. 43.1 Law Income Tax

As a general rule, remuneration in kind must be valued at its normal market value. However, in the valuation of certain remuneration in kind special valuation rules discussed below must be applied.

Deposit into account

Regulations: Articles 43.2 Law IRPF and 102 Regulation

The amount of the valuation of the remuneration in kind for work will be added to the payment on account that must be made by the payer of said remuneration, regardless of whether said payment on account has actually been made. The amount of the payment on account will be the result of applying the corresponding withholding percentage to the valuation of the remuneration in kind.

Notwithstanding the foregoing, the income on account will not be added in the following cases:

  1. When there is no obligation to make payments on account of remuneration in kind for work, as is the case of contributions paid by the promoters of pension plans, company social welfare plans and social welfare mutual funds that reduce the tax base.
  2. When the income on account has been passed on to the worker.

In short, in the case of remuneration in kind, the total performance of the work is obtained by adding the valuation of the remuneration in kind plus the amount of the payment on account not passed on to the worker. So that:

Total performance = Valuation + Unreturned income