All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Spain: Should medics be taxed on invitations to medical seminars?

intl-updates-small.jpg
blanco.jpg

Abigail Blanco

The Spanish Central Economic and Administrative Tribunal (TEAC) and State Tax Agency (AEAT) recently concluded that an invitation to a medical practitioner to attend a medical seminar means that they obtain income in kind.

According to the TEAC (in a decision dated April 4 2017) and AEAT (in a report on May 5 2017, which mirrored that decision) this income in kind may be earned income or income from an economic activity, according to whether the invitation is made to a hospital (which sends a representative on its behalf) or personally to the medic (whether self-employed or a hospital employee), respectively. In both cases, tax will have to be withheld from the income in kind by the entity that made the invitation.

There is no change to this conclusion, say both authorities, even if the invitations are geared towards the medic's training, because when the law exempts training from tax, it only does so for workers who are employees, and the initiative to provide the training must have come from the employer (who also must have funded it in full). The AEAT added that these expenses on attending seminars are not eligible for the relief for per diems (travel, meal and overnight expenses) either, because that relief may only be claimed by the recipients of earned income under an employment contract or a special-charter relationship for public workers.

It would appear that no consideration has been given to the definition of income in kind in the Personal Income Tax Law. This definition dictates that there will only be income in kind (and the law makes no distinction here between earned income and income from an activity) when it serves to satisfy strictly private purposes. When clearly, the training the medical practitioners receive by attending events, invited by pharmaceutical companies, directly benefits their medical practice, their medical expertise, their training in new treatments, products or innovations (…), besides contributing to maintaining the quality of the system (which we can safely say benefits the patient at the end of the line).

Both documents (the decision and the report) have caused considerable concern among both medics and pharmaceutical companies, in view of the effect this administrative standard may have on medical training; and have received a response from the Minister of Finance and Public Service dated May 29 2017, stating that "the government's intention to amend the Personal Income Tax Regulations to clarify in the legislation that the training courses of health personnel, funded by organisations, are not taxable for personal income tax purposes".

In July 2017, the Minister published its proposed amendment to the Personal Income Tax Regulations, which seems to be aimed at protecting employees working on medical centres who are authorised by their employers to attend the medical seminars. Surely, the temporary effect of the amendment, in case it is approved, will provoke discussions. Meanwhile, the AEAT's tax inspectors have already started work on these matters.

Abigail Blanco (abigail.blanco@garrigues.com)

Garrigues Madrid

Website: www.garriges.com

more across site & bottom lb ros

More from across our site

This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree