Categories: Economy

Are members of the European Parliament exempt from income tax?

Author: EUROPEAN PARLIAMENT PHILIPPE STIR | EUROPAPRESS

The Supreme Court pronounces on the liquidations of the Spanish member of the Eurochamber

The gross salary of an MEP reaches 9,808 euros per month. Before tax, of course. This allowance is subject to special Union tax and accident insurance payments. After the toll is paid, the allocation remains around 7,646 euros.

What happens to that salary afterwards? “The final compensation (after tax) of the representative depends on the tax regulations of the country of origin,” he explains European Parliament.

In Spain, income from work is subject to income tax (personal income tax). But does this also apply to the salary of a member of the European Parliament?

He Supreme Court clarified this issue in the judgment of March 9. It clarifies that the salaries of members of the European Parliament are not exempt from income tax, even if the seat is in Brussels and the worker in question performs his work abroad.

Thus it resolves an open dispute between Spanish MEP Gabriel Matoand Tax agency. Popular left 60,100 euros unreported in their personal income tax returns from 2010 to 2013, realizing that this was tax-exempt income.

The State Treasury subsequently corrected the aforementioned settlements and imposed a fine, which Mato appealed to the High Court of the Canary Islands, taking advantage article 7 of the income tax, which allows some workers to be tax-exempt.

What conditions must be met? First, that the work is performed for a company or entity that is not a resident of Spain or a permanent business unit located abroad. In addition, in the area where the work is performed, a tax of a similar nature to personal income tax must be applied, as prescribed by law.

In the case studied, the Supreme Court understands that the appellant to benefit from Article 7 should work as an employee or have the status of a civil servant. However, the higher court considers that “the relationship of representatives with the European Parliament is completely unrelated to the above-mentioned characteristic, in the sense of dependence. There is no working relationship or dependence of its members with the Chamber». And that is that the connection with the institution begins or ends when the citizens, who are the ones who determine their representatives by universal suffrage, decide so.

Parliament is not a company

Judges also understand this The European Parliament cannot be treated as a “company or entity not resident in Spain”, since they do not follow the same socioeconomic goals. “national sovereignty rests in the parliaments represented by its members, entrusting them with the function of, mainly, legislative, budgetary and political control”.

The aforementioned exemption was developed in order to favor companies in their internationalization, offering flexibility to the workers of said companies when moving to their headquarters abroad. However, the Supreme Court considers the comparison made by the MEP in this case “artificial” and “forced”: Eurochamber is not a company.

The judges also refute his opinion as a civil servant, since they have to pass tests before providing services to European institutions, not parliamentary elections. In addition, MEPs “have their own and differentiated regime”, the verdict concludes.

Source: La Vozde Galicia

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