In the day-to-day operations of any company, including startups and tech SMEs, employees often incur work-related expenses: travel, meals during business trips, tools, parking, tolls, ad-hoc purchases for clients, or project-related costs.
In large organizations, these matters are usually handled through internal tools and standardized processes. In smaller or early-stage companies, however, expense control and traceability can become more complex due to limited administrative resources, constant urgency, and improvised criteria. The result is not only accounting-related: unclear or inconsistently applied expense policies often lead to misunderstandings, employee dissatisfaction, and unnecessary deterioration of workplace climate. More importantly, they may trigger a sensitive issue: misclassifying payments as “expenses” when they effectively operate as remuneration, with significant labor, tax, and social security risks.
The key to reducing friction and exposure is clear: properly distinguishing salary items from non-salary expenses and designing a reimbursement system consistent with that distinction.
Spanish labor law distinguishes between salary and non-salary payments. Salary is the consideration for work performed. In addition to base salary, salary supplements may exist if recognized by the applicable collective agreement or employment contract.
The decisive criterion is causality: if the purpose of the payment is to remunerate work, it is salary, regardless of how it is labeled. Renaming a concept does not change its legal nature; in disputes, its actual function prevails.
Certain payments made within the employment relationship do not remunerate work but compensate or indemnify employees for expenses incurred due to their professional activity. These amounts are considered non-salary only when they strictly fulfill this compensatory purpose.
Cash handling allowance compensates risks associated with handling cash (involuntary errors or shortages). It does not remunerate work but covers a risk imposed by the employer. It is common in cashier roles and typically regulated by sector collective agreements.
This includes amounts paid to compensate for the use, deterioration, or acquisition of tools necessary for the job, as well as cleaning or maintenance of work clothing when the cost is borne by the employee.
Compensation for work clothing covers the cost of garments required by the employer, either through direct provision or monetary reimbursement.
This is one of the most error-prone areas. For personal income tax purposes, these payments are generally considered employment income, but they may be tax-exempt if they strictly compensate expenses and comply with legal requirements and limits.
Key requirements include:
Public transport costs are exempt when fully justified. For private vehicles, the exemption is limited to 0.26 euros per kilometer plus documented tolls and parking. Any excess is taxable.
Meal and accommodation allowances are only exempt when incurred in a municipality different from both the workplace and the employee’s residence, with different limits depending on overnight stays and whether the trip is domestic or international.
There is also an important time limit: if the employee remains continuously in the same municipality for more than nine months, allowances lose their tax-exempt status.
Their nature depends on their configuration. They may be non-salary if they genuinely compensate commuting costs or time and accrue per working day. They may be considered salary if paid on a fixed and regular basis without a real link to the expense.
In teleworking or hybrid models, these allowances require careful regulation, as their underlying cause may be altered or disappear.
Not all expense-related payments are excluded from the Social Security contribution base. Exclusions are strictly regulated and closely linked to tax limits. Any excess, lack of justification, or misclassification may render the payment fully or partially subject to contributions, with the risk of assessments, surcharges, and penalties.
Employee expense management is often seen as a minor issue until it becomes a serious problem. Many disputes arise not from bad faith, but from improvisation in an area where mistakes are costly.
Not everything paid as an “expense” is legally an expense, and not every non-salary item is automatically excluded from payroll, taxation, or contributions. The legal nature of each concept depends on its real cause and strict compliance with applicable requirements.
Proper expense management is not about adding bureaucracy, but about anticipating conflicts. Because what today seems like an insignificant receipt can become tomorrow a major legal issue. And avoiding it is almost always a matter of planning.
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