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V2820-20 17 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Transfer of funds to finance a management company is not subject to VAT

A holding company enquired whether the transfer of funds to a management company of which it is the owner was subject to VAT. The DGT ruled that these movements do not constitute consideration for services, nor do they provide a specific advantage to the recipient.

The question raised

Subjectivity of the transfer made by the applicant entity to the management entity regarding the amounts collected.

The DGT's ruling

For a transaction to be subject to VAT, there must exist a legal relationship of reciprocal benefits where the remuneration is the consideration for the service. The funds received by the applicant derive from economic rights over their holdings, and the transfer of funds to finance the management company does not constitute the consideration for a service provided by the latter. In the absence of an act of consumption or a concrete benefit for the recipient, the transfer is not subject to the tax.

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