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V0616-16 15 February 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeto pasivo

VAT applicability to services provided by a partner to their company depends on independence or subordination

A partner and director of a management company inquired whether their services to the entity are subject to VAT. The DGT ruled that VAT applicability depends on a case-by-case analysis of whether the relationship is one of independence or subordination.

The question raised

Liability for services provided by the applicant to the company of which they are a partner. Clarification of the concept of whether the partner is integrated or not into the organizational structure of the company.

The DGT's ruling

To determine liability for VAT, it must be analyzed whether the partner acts independently or under labor subordination. Three indicators must be assessed: the working conditions (whether they organize their own means), the remuneration (whether they bear the economic risk according to results), and liability towards third parties. If the partner is subject to the organizational criteria of the company, does not receive remuneration linked to results, and the company is liable towards third parties, the relationship is an employment relationship and is not subject to VAT. If they act with their own means, assume the economic risk, and are liable towards third parties, the activity is subject to the tax.

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