Partners must prove independence to invoice services to their company

The nature of the relationship between a partner and their company is a critical point for the correct determination of tax obligations. The mere provision of a service is not enough for it to be subject to Value Added Tax (IVA); it is necessary to analyze the structure of the relationship between both parties.

What the DGT has ruled

The Dirección General de Tributos (DGT) has addressed the issue of VAT, IAE, and IRPF taxation on services that a partner provides to the company of which they are a member. The criterion establishes that the liability for VAT on these operations is not automatic. The determining factor is whether the provision of services is carried out independently or if, on the contrary, there is a relationship of dependency that undermines the commercial nature of the operation.

Under this criterion, the applicable regulations (Law 37/1992 and Directive 2006/112/EC) require distinguishing whether the partner acts as an independent professional with technical and organizational independence, or if their activity is integrated into the company's structure in such a way that it must be considered an employment or dependency relationship.

What this means for you

If you are a partner in an entity and provide additional services to it, the classification of said activity will have direct consequences for three taxes:

• IVA: If independence exists, the partner must issue an invoice with VAT. If dependency exists, the operation will not be subject to the tax.
• IAE: Registration in the Economic Activities Tax (IAE) will depend on the nature of the activity.
• IRPF: The correct classification will determine whether the income is taxed as income from economic activities or as income from employment.

What should be done

It is necessary to evaluate the reality of the service provision before proceeding with invoicing. It must be analyzed whether the partner has their own means, autonomy in the execution of their tasks, and whether there is a hierarchical or economic subordination that could be interpreted by the Administration as a relationship of dependency. Each situation requires a detailed analysis of the facts to avoid tax contingencies due to the incorrect application of IVA or IRPF.