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V1290-15 28 April 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Services rendered by a sole trader partner to the company are treated as income from work

A partner working as a sole trader and serving as a free administrator of a company seeks to understand how their services are taxed. The DGT determines that, as the requirements for economic activities are not met, the income is classified as income from work.

The question raised

The question is asked regarding the taxation applicable to the taxpayer for services rendered to the company, determining the type of withholding tax that, if applicable, would apply to them.

The DGT's ruling

The income from the company's business activities paid to the partner has the nature of employment income, as the requirements for economic activities under Article 27.1 of the Personal Income Tax Law are not met. This income is subject to withholding tax according to the general procedure of the Personal Income Tax Regulations. The remuneration must be valued at its normal market value in accordance with transfer pricing regulations.

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