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V0933-14 2 April 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · gastos deducibles

Professional services of a managing partner may be subject to VAT or considered income from work

The question arises whether the professional services of a managing partner (design and marketing) are absorbed by their position or are independent. The DGT responds that deductibility in corporate tax depends on the reality of the operation and its relationship, while in personal income tax and VAT, classification depends on the nature of the relationship (employment or professional).

The question raised

1) Whether the commercial relationship should be considered to absorb the employment relationship, or conversely, whether professional services are performed in addition to the inherent functions of the position of director.

The DGT's ruling

In Corporate Income Tax, professional services provided by partners are deductible provided that the conditions of accounting registration, accrual, correlation of income and expenses, and documentary justification are met, while respecting transfer pricing rules. In Personal Income Tax, fees for professional services may be classified as income from economic activities or employment income, whereas remuneration for the position of director is always employment income. Regarding VAT, the provision of services shall be subject to tax if the professional acts independently and not under a relationship of dependency or employment.

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