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A taxpayer has inquired whether profit-sharing payments made to a company under a joint venture agreement (contrato de cuentas en participación) are deductible. The Directorate General for Taxes (DGT) has ruled that, for the manager, these returns are classified as deductible expenses related to their economic activity.
This ruling clarifies the tax treatment of joint venture agreements, allowing managers to deduct profit distributions as business expenses provided the contract's substance aligns with its legal form.
The tax team reviews your specific situation.
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