Presidents Fees. Is it a taxable income?
Following on from the question about the legality of “The Presidents Fees”, we were asked whether the President has to declare the fees and pay tax on them? Assuming there is no receipt to justify costs other than the time he has put in, one would assume that this is an income for the time spent on the job. In other words the payments is for the hours of work and as such it can be considered as either an employment or income for the president. So how can the costs be justified for accounting purposes? Or can the Community make a gift to the President for his services? What is the proper procedure?
To answer this question, I asked my good friend and author of the book “You and the Law in Spain” to help us answer this issue.
David’s response is a straight “NO, the President does not have to declare his fees and pay tax on them.” This is because the President is not actually “paid” for his services. The Community votes at the AGM to establish a fund which provides for the President’s expenses. This fund contains a certain amount of money and the President is authorized to use these funds for his expenses. Suppose that he has to attend a court proceeding in Malaga city. He justifies his transport expenses, perhaps his lunch, and so forth by a simple note, which is sufficient justification for the accounts. Or perhaps he puts in a lot of time and effort to prepare a report on a new aerial. Again, he justifies this with a simple note. As such the president does not need to declare this as income.
I personally find that the best way to justify for any expense or time spent is by showing what you are doing on a routine basis. More than 8 years ago we created our first website www.elportondemijas.es as I took over another president in a coup d’etat. Our objective was to improve transparency and communication. 8 years on, with the Urbytus platform, I document every work I do and can account for every second of my time spent on community matters. This has meant that the last time I did get questioned, I was able to prove everything. Don’ wait until it is too late. Communication is key and is simple and the last thing you want is your integrity to be questioned.
We hope that this provides some answers to this issue and if you feel that you need more help or explanation regarding the Presidents Fees or other issues affecting communities, please do not hesitate to contact us. We will be more than happy to help you in all aspects as much as we can.