Companies with professional partners must calculate the 75% remuneration based on total accounting profit

Companies that have professional partners providing services to the entity itself must pay special attention to the calculation of their remuneration to avoid tax contingencies. The application of the valuation rule for Corporate Income Tax (IS) requires compliance with certain remuneration thresholds that have been recently clarified by the Administration.

What the DGT has ruled

The Dirección General de Tributos (DGT) has ruled that, to comply with the requirement established in Article 18.6.b) of the Corporate Income Tax Law (LIS), the remuneration of professional partners cannot be less than 75% of the entity's total accounting profit. This calculation must be performed on the accounting profit for the fiscal year that determines the tax base, prior to the deduction of said remunerations.

The inquiry raised whether this percentage should apply only to the portion of the profit attributable to the professional partner's contribution or whether it should also include the profit generated by other non-partner employees. The DGT has rejected the second option, confirming that the calculation must be carried out on the entity's total accounting profit, regardless of whether other employees under employment contracts are involved in its generation.

What this means for you

If your company has professional partners providing services to the entity, compliance with the 75% threshold is decisive for the valuation of transactions. If this percentage is not reached based on the total accounting profit, transactions between the partner and the company cannot apply the simplified valuation rule; instead, they must be valued at their market value using the methods provided for in Article 18.4 of the LIS.

This implies that the calculation cannot be segmented to benefit the professional partner based solely on their direct contribution to the profit, but must consider the profit-generating capacity of the entire business structure.

What should be done

It is necessary to perform rigorous monitoring of the entity's accounting profit before the deduction of partners' remunerations. It must be verified that the sum of the remunerations of all professional partners reaches, at a minimum, 75% of said total profit to ensure compliance with current regulations and avoid the obligation to apply more complex market valuation methods.