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V1463-18 30 May 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · sociedad civil

Civil companies with commercial purposes and legal personality are subject to Corporate Tax

A timber trading civil company has requested clarification on whether it must pay Corporate Tax and if its partners' salaries are tax-deductible. The DGT ruled that, because it has a commercial purpose and legal personality, it is a Corporate Tax taxpayer and may deduct remuneration provided all legal requirements are met.

The question raised

Question raised regarding Corporate Income Tax:

The DGT's ruling

Civil societies with a commercial purpose are subject to Corporate Income Tax if they possess legal personality, which is evidenced by a public deed or a private document submitted to the Administration to obtain a Tax Identification Number (NIF). Expenses for services provided by partners are deductible provided they are recorded in the accounts, imputed on an accrual basis, are supported by documentary evidence, and are valued at market value. Remuneration to partners for business activities is considered income from employment for Personal Income Tax (IRPF) purposes. The transformation of a civil society into a limited liability company does not modify the legal personality nor does it generate capital gains if the ownership interest remains unchanged.

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