The Supreme Court has established that MEPs cannot consider their salary as exempt income and thus avoid paying personal income tax.

The Contentious-Administrative Chamber has dismissed the appeal filed by the PP MEP Gabriel Mato regarding the settlements of the IRPF between 2010 and 2013 in which he stopped consigning, understanding that it was exempt income, 60,100 euros from his remuneration as an MEP. That figure is the maximum that the law allows to be considered as exempt income for having been generated abroad.

The Tax Agency corrected its settlement and included that income, in addition to imposing a sanction on the MEP. The High Court of Justice of the Canary Islands confirmed the decision of the Treasury and the politician appealed to the Supreme Court. He argued that the exemption from the Personal Income Tax Law for certain work carried out abroad applied to the salary of an MEP. In another article, the same law establishes that "the amounts paid, by reason of their position, to Spanish deputies in the European Parliament" must be declared.

The Supreme Court emphasizes that the law requires, in order to wield the article of exempt income, that it occurs within a relationship "of alienation", that is, dependency. And he concludes that "there is no doubt that the relationship of a Member with the European Parliament is completely alien to this characteristic of alienity, in the sense of dependence; there is no employment relationship, in any of its possible aspects, nor statutory, nor is there any dependence of its members with the Chamber.

"Artificial and forced"

The magistrates add that the European Parliament cannot be considered to be "a company or entity not resident in Spain" or "a permanent establishment located abroad", as provided for by law to determine what can be exempt income. "A Parliament, of course, which neither constitutes a fixed place of business, nor fits into some of the examples to use such as branches, agencies, offices, workshops, warehouses, shops, mines, quarries, oil and gas wells or any other place of extraction or exploitation of natural resources," says the sentence.

The magistrates insist that parliaments exercise their function as representatives of citizens "freely and independently, without a hint of any dependence, neither labor nor statutory or similar."

Thus, they conclude that "obviously" that the similarities and parallelism that the appellant seeks to tend are "artificial and forced, and not only is the wording of the provision extraneous, but does not even fulfill the purpose for which the exemption is provided ... , since it has already been said that it is a question of favouring companies and their degree of internationalization and workers individually considered who must move abroad for reasons of work, which is poorly compatible with the institutional character and parliamentary purposes in a common political and economic organization of several countries and the role played by the European Parliament and, therefore, the public obligations assumed by the State of origin and the MEPs whose displacement is from any point unrelated to an economic incentive or of the company or entity, or workers for work reasons."

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