The Central Economic Administrative Court (TEAC), in a ruling issued on March 2, has established criteria and settled the issue of personal income tax and maternity benefits.
Thus, the TEAC, contrary to the ruling issued by the High Court of Justice of Madrid which established that maternity benefits were exempt, as we analyzed in the post “ maternity benefits exempt from personal income tax ”, understands that maternity benefits must be taxed and are not included in the exemption cases established by law.
Evolution of the matter
The High Court of Justice issued a ruling on 6 July 2016 declaring women database that maternity benefits were exempt from personal income tax, which went against the criteria followed by the Tax Agency. The Court understands that maternity benefits fall within the exemption assumptions of article 7 letter h) of Law 35/2006.
The Tax Agency's criteria is that remuneration paid in the form of maternity benefits by Social Security should be classified as employment income.
Subsequently, on October 27, 2016, the High Court of Justice of Andalusia issued a ruling opposing the criteria adopted by the High Court of Justice of Madrid, as we explained in the post “ maternity benefits are taxed .”
Now the Central Economic Administrative Court unifies criteria and establishes that maternity benefits are taxable.
TEAC Criteria
The TEAC determines whether or not the benefit received from the National Social Security Institute resulting from maternity leave is provided for in the regulations governing Personal Income Tax as tax-exempt income.
Article 7 of Law 35/2006 establishes in letters h) and z) two cases of exemption:
Article 7 h) (…) Other public benefits for birth, delivery or multiple adoption, adoption, dependent children and orphanhood will also be exempt. Public maternity benefits received from the Autonomous Communities or local entities will also be exempt.
Article 7 z) Family benefits and assistance received from any of the Public Administrations, whether linked to the birth, adoption, foster care or care of minor children.
The TEAC's decision argues that both a literal and a final interpretation of the rule lead to an identical conclusion. The maternity benefit paid by Social Security has the function of replacing the normal remuneration that the taxpayer would receive for his or her usual work and that he or she has stopped receiving in order to enjoy said leave.
The real cause of the benefit is not maternity itself, but the suspension of the employment relationship that gives rise to the maternity situation , which applies equally in cases of maternity and adoption as in other cases provided for in the law for the collection of other benefits, such as foster care, temporary disability due to accident or illness or risk to pregnancy: the basis of the benefit is the suspension of the employment contract and not the cause (maternity) that gives rise to said suspension.