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V4643-16 3 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · agrupación de interés económico

AIE contributions are not subject to Income Tax withholding as they do not constitute income for members

A query was raised regarding whether contributions to an Economic Interest Group (AIE) are subject to VAT and whether Income Tax (IRPF) must be withheld from members. The Directorate General for Taxes (DGT) ruled that no Income Tax withholding is required because payments from members to the AIE do not constitute income for them, and stipulates that VAT exemption is conditional upon strict compliance with several requirements.

The question raised

Inquiry is made regarding the VAT liability of said services, as well as the obligation to withhold Personal Income Tax (IRPF) on the fees charged or passed on for said services to the members of the grouping who are natural persons.

The DGT's ruling

Regarding Personal Income Tax (IRPF), payments made by partners to the AIE do not constitute income for the taxpayers; therefore, withholding is not applicable. Regarding VAT, the exemption of fees only applies if the AIE is non-profit, provides auxiliary services exclusively to its partners (without third parties), and these partners carry out exempt or non-subject activities that do not grant a right to deduction. Failure to comply with any requirement nullifies the exemption for all activities of the entity.

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