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V2635-21 29 October 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · honorarios por éxito

VAT and Income Tax treatment of success fees and returns from joint venture accounts

A lawyer seeks clarification on the taxation of variable fees and a joint venture account agreement entered into with their spouse. The DGT rules that the fees are subject to VAT and constitute income from economic activities, whereas the profits from the joint venture account are classified as income from movable capital.

The question raised

Taxation regarding VAT and Personal Income Tax (IRPF) for both the fees and the joint account contract.

The DGT's ruling

Legal services based on a success fee are subject to VAT, which accrues upon provision of services or upon collection if advances are made. Fees constitute income from economic activities and are attributable to the period in which the company collects the amounts. Income from a joint account is considered income from movable capital due to the transfer of capital to third parties. In a joint account, no new VAT taxable person arises, as the manager is the sole proprietor of the business.

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