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V0122-14 21 January 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retención

IRPF retention due on service payments, excluding VAT

A company asks when and on what amount IRPF retention is due when paying professional fees in installments, including full VAT in the first payment. The DGT responds that retention arises upon payment of income and that the portion of the payment constituting service remuneration must be distinguished from VAT.

The question raised

The moment at which the withholding on such income must be carried out and the amount on which the withholding must be applied, taking into account that in the first payment, an amount equivalent to at least the totality of the VAT accrued in the transaction is satisfied.

The DGT's ruling

The obligation to withhold arises at the moment the income is satisfied or paid. The withholding base is the total amount satisfied, but in installment payments, it must be determined which part corresponds to the services and which part to the charged VAT. The collection of VAT cannot be considered to be entirely the payment of the tax, but rather the part of the income corresponding to the amount collected must be imputed proportionally.

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