Partners providing services to their company must invoice VAT if acting independently

The nature of the relationship between a partner and their own company is a recurring point of friction in tax management. Not all services provided by a partner to the entity they represent are subject to Value Added Tax (IVA), as the Administration distinguishes between a professional service provision and an employment relationship.

What the DGT has ruled

The Dirección General de Tributos (DGT) has established that to determine whether a partner's services are subject to IVA, it is necessary to analyze whether they act independently or under a relationship of subordination. For this analysis, the tax authority relies on Law 37/1992 and Directive 2006/112/EC, assessing three fundamental indicators:

• Working conditions: It must be observed whether the partner organizes their own technical means and manages their own schedules autonomously.
• Remuneration and risk: It is decisive whether the remuneration is linked to results and whether the partner bears the economic risk of their activity.
• Liability: It is analyzed who is liable to third parties for the execution of the tasks.

If the partner is subject to the company's organizational criteria, does not receive remuneration based on results, and it is the company that is liable to third parties, the relationship is considered employment-based and the services will not be subject to IVA.

What this means for you

If you are a professional holding the status of a partner in a company, the way you provide your services will determine your tax obligation. If you act with autonomy, manage your own resources, and assume the risk of your activity, your invoices must include IVA. Conversely, if your activity is integrated into the company's organizational structure and you lack operational independence, you would be in an employment relationship not subject to the tax.

What should be done

Companies must perform a detailed analysis of the actual operations of their partners to avoid invoicing errors. It is necessary to document whether there is true independence in the provision of services or if, on the contrary, the requirements of a subordination relationship are met. Each situation must be assessed individually to ensure compliance with current regulations.