When is the summer bonus paid and how is it taxed?
Both pensioners and workers with at least 14 paychecks are entitled to receive the summer bonus, together with their monthly salary. Article 31 of the Workers’ Statute is the legal formula that regulates this payment, which is made at the beginning of the summer. Below, we will analyse when the summer bonus is paid and how it is taxed in Spain.
When is the summer bonus paid in Spain?
The summer bonus in Spain refers to one of the two extra payments that workers usually receive during the year, the other being the Christmas bonus. These extra payments are included in workers’ annual salary and are granted as an additional benefit.
The summer bonus is generally paid at the beginning of the summer, usually in June, although the exact date may vary depending on the collective agreement of each sector or the company’s policies. Some companies pay this bonus in June, while others may pay it in July.
In terms of calculation, the salary for these bonuses is generally based on the employee’s base salary. In a typical scenario where two bonus payments are received, the annual salary is divided into fourteen payments (twelve months plus the two bonuses). Thus, each bonus is equivalent to one month’s normal basic salary.
It is important to mention that although these two extra payments are common in Spain, not all companies apply them in the same way. Some companies choose to prorate the extra payments, i.e. they divide the annual salary into twelve payments instead of fourteen. In this case, the employee receives more salary each month, but does not receive the extra payments in summer or at Christmas.
Moreover, depending on the person’s employment situation (whether he/she is a civil servant, works part-time, etc.), the calculation and distribution of the summer pay may vary. Therefore, it is always best to check the employment contract or talk to the human resources department, to fully understand how and when the summer pay is paid.
How the summer bonus is taxed
Both summer and Christmas bonuses are considered as personal income from work and are therefore subject to personal income tax (IRPF) in Spain. The way in which it is taxed depends on the method of payment of the bonus and the employee’s individual tax rate.
In the case of companies that apportion the bonus payments into the normal twelve monthly payments, the IRPF is applied in the same way as any other monthly salary.
For companies that pay the bonus payments as two additional payments per year, the IRPF withholding may be higher in the month in which the bonus is paid. This is because the personal income tax withholding is calculated on the basis of the total salary expected to be received in the year. When extra pay is received, the salary for that month is higher, so the IRPF withholding may also be higher.
However, it is important to note that this additional withholding on the bonus can be balanced out when filing the income tax return. If the personal income tax withholding was too high in relation to the employee’s individual tax rate, he or she may be entitled to a refund. Conversely, if the withholding was too low, you may have to pay more.
Can the employee waive and prorate the payments?
In Spain, the number of payments an employee receives during the year – whether 12 or 14 – is usually stipulated in the employment contract and in the collective bargaining agreement for his or her sector. This means that, in general, it is not something that the employee can choose for him or herself.
That said, Spanish law allows workers and employers to reach individual or collective agreements that deviate from the rules of the collective agreement as long as these agreements benefit the worker. Therefore, although it is not common, a worker could potentially negotiate with his or her employer the possibility of receiving 12 payments per year instead of 14 (or vice versa), if both parties agree.
It is important to note that any changes to the pay structure must be in writing and respect the minimum rights of the worker under Spanish law and the collective agreement. It is also advisable to seek legal or trade union advice before agreeing to changes in the pay structure.
When do pensioners in Spain get their extra pay?
The summer bonus is generally paid at the beginning of July, although the exact date may vary slightly from year to year, in any case, it is usually paid in mid-July.
It is important to remember that the bonus amount depends on the pension received by the pensioner. As with salaries, the bonus is usually equivalent to one month’s pension. However, there may be variations depending on the specific situation of each pensioner.
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