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V3289-14 9 December 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IRPF · rendimientos del trabajo

Manager remuneration considered as income from work in income tax

The DGT clarifies that administrator remuneration is treated as income from work and examines VAT applicability based on the nature of the relationship.

The question raised

1) What would be the treatment for Personal Income Tax purposes regarding the salary that the partners will receive from the company for the work they perform therein.

The DGT's ruling

Remuneration received for the performance of administrative duties is considered employment income under the Personal Income Tax Act (LIRPF), with a withholding tax of 35% (or 42% in specific periods). If the position is unpaid, no remuneration is imputed for Personal Income Tax purposes. The professional services of partners shall be considered employment income if they derive from an employment relationship, or shall be subject to VAT if they are structured through a service contract without subordination or independence.

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