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V2601-17 13 October 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · indemnización por clientela

Goodwill compensation in agency contracts is subject to VAT and Income Tax without irregularity reduction

A query was raised regarding whether goodwill compensation following the termination of an agency contract is subject to VAT and Income Tax. The DGT has determined that such compensation constitutes consideration for services rendered; therefore, VAT must be charged and it must be taxed under Income Tax as income from economic activities, without entitlement to the 30% reduction.

The question raised

Taxation of the compensation for VAT and Personal Income Tax (IRPF).

The DGT's ruling

The compensation for clientele under Article 28.1 of Law 12/1992 constitutes consideration for services that yield benefits for the entrepreneur, and is therefore subject to VAT. For Personal Income Tax (IRPF) purposes, it is taxed as income from economic activity and does not allow for the 30% reduction for irregular income, as it does not derive from the cessation of activity nor does it substitute economic rights of indefinite duration.

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