The new legislation regulating working from home (called telework when electronic means are used) has finally been published and requires companies to pay the associated expenses or reimburse them, without workers assuming expenses related to equipment, tools or the necessary means to perform their work. But, will this have tax and Social Security consequences?
Royal Decree-Law 28/2020, of September 22, 2020 on telework makes it mandatory for companies to assume the costs of providing the means and tools to work, such as a computer, screen, mouse, keyboard, etc., which may even include –although it is unclear– chairs, tables, office materials, electricity, telephone, heating, air-conditioning and fiber optic expenses, etc.
The big question is whether these means, equipment and tools can only be used for professional reasons (to perform work) or also used for personal purposes, in which case, it may be necessary to pay tax and Social Security on remuneration in kind.
In certain cases, it is considered that the electronic tools and means provided to employees by companies to perform their work, for example, a mobile phone and computer, may constitute remuneration in kind, to the extent that they are made available to workers and can therefore be used for personal purposes.
Without commenting on the appropriateness of this criteria, the telework regulations and requirement to provide the necessary means to work at home will mean an increase in business costs and could even lead to the corresponding reduction in the net remuneration received by workers by having to pay more tax and discounts in contributions, if such means are deemed as remuneration in kind.
Indeed, the providing of a screen, keyboard, mouse and ergonomic chair to work from home, to quote just a few examples, could result in the need to pay tax and contributions, given that, under the above mentioned criteria, the equipment will be available to the worker for personal use at home.
The reimbursement of electricity, telephone, optic fiber expenses, etc. could also have an impact on worker taxation and contributions if it is finally considered that this form of compensation not only covers professional work, but also personal use. In fact, even though these expenses will only be paid in proportion to working time, it could also be understood that there is higher remuneration, as it could be considered that the worker’s family benefits from such “means”, or at least has them available,even during the proportional part of the working day.
These doubts, in addition to those relating to the actual extent of assuming the costs of telework, could eventually prevent the Spanish market from taking advantage of effective and modern formulas designed to make work more flexible and, what is worse, even reduce the incentives to use them.
Garrigues Employment & Labor Law Department