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V3106-16 5 July 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · rendimientos del trabajo

Administrator's remuneration may be considered work income or business income

A sole shareholder and administrator of a legal services firm asks whether their remuneration should be classified as employment or commercial and whether their services are subject to VAT. The DGT states that remuneration for the role of administrator is always work income, and the nature of additional professional services depends on whether the shareholder is registered under the self-employed regime or mutualism.

The question raised

Question raised 1) Whether the remuneration of the sole partner and simultaneously administrator should be structured as an employment or commercial relationship.

The DGT's ruling

For VAT purposes, the relationship is employment-based (not subject to VAT) if the professional is subject to the company's organizational criteria, does not receive consideration linked to results, and the company is liable to third parties. If the partner is not subject to said organization, receives remuneration linked to results, and is liable to third parties, the provision shall be subject to VAT. For Personal Income Tax (IRPF) purposes, remuneration for the position of administrator is always considered income from employment. Remuneration expenses for the partner are deductible for Corporate Income Tax (IS) purposes if they meet the requirements of recording, accrual, and substantiation.

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