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V3292-20 6 November 2020 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · gestión discrecional

Discretionary portfolio management fees are not deductible for Personal Income Tax (IRPF)

A taxpayer inquired whether fees from a discretionary portfolio management contract are deductible and if the redemption of funds to cover such fees has tax implications. The Directorate General for Taxes (DGT) ruled that the commission is not deductible and that the redemption generates capital gains or losses without allowing for the deduction of said commission.

The question raised

Whether the management fee charged by the bank is deductible for the taxpayer under Personal Income Tax and whether the redemption of fund shares carried out for its payment has an impact on said tax.

The DGT's ruling

Commissions for discretionary and active portfolio management are not administrative and custody expenses deductible from investment income. The redemption of shares to pay such commission constitutes a transfer that generates capital gains or losses. The management fee is not an expense inherent to the redemption operation, and therefore cannot be computed to determine the transfer value.

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