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V1009-19 ·9 May 2019 ·consulta-vinculante Medium impact
Tax

Sporadic arbitration services provided by civil servants are exempt from VAT and taxed as employment income for Income Tax purposes

A query was raised regarding whether compensation paid to arbitrators in labour election processes is subject to VAT and what the applicable Income Tax (IRPF) withholding rate should be, particularly when the arbitrators are civil servants. The Directorate General for Tax (DGT) ruled that VAT does not apply if the civil servant is not acting as a professional, and that such payments constitute employment income subject to standard withholding rates.

In 6 key points

How it affects those involved

This ruling clarifies the tax treatment for civil servants performing occasional arbitration duties, ensuring they are not incorrectly taxed as self-employed professionals and confirming the correct withholding regime for employment income.

Lifecycle

2019-05-09PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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