Doctrine by topic · DGT Observatory

Arm's length principle: evolution of DGT doctrine

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Settled doctrine High confidence 35 rulings · 2014–2026

Current position

Remuneration for administrative positions is always considered income from employment. For services provided by a partner to be considered income from economic activities, they must meet the requirements of Article 27.1 of the LIRPF (Personal Income Tax Law), including registration in the special Social Security regime. In transactions with partners, valuation must be carried out at their normal market value.

The DGT's position remains constant in classifying administrators' remuneration as income from employment. The need to comply with strict LIRPF and Social Security requirements has been reiterated so that partners' services are not considered mere employment income. The application of market value in transactions with partners is a recurring criterion.

Turning points

  1. V1323-15

    Establishes that to consider a partner's services as an economic activity, the inclusion in the Second Section of the IAE (Economic Activities Tax) and registration in the special Social Security regime must occur.

Analysis based on 34 of 35 rulings with a stated position. Updated 16 September 2026.

Rulings on this topic

24
V0905-26 24 Apr 2026

Investors in audiovisual productions can claim tax deduction

SG de Impuestos sobre las Personas Jurídicas
deducción por inversión en producciones audiovisualesfinanciación de produccionescontrato de financiaciónpropiedad intelectualactividades económicas LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 18LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 36.1
Affects CompanyExpat · Non-residentIndividual
V1361-21 12 May 2021

Rental taxable base depends on relationship and market value

SG de Impuestos sobre el Consumo
comunidad de bienesbase imponiblevalor normal de mercadovinculaciónsujeto pasivo LIVA — Ley 37/1992 del IVA art. 4.unoLIVA — Ley 37/1992 del IVA art. 5
Affects CompanyExpat · Non-residentIndividual
V0516-20 4 Mar 2020

Requirements for exemption from income tax on foreign group work

SG de Impuestos sobre la Renta de las Personas Físicas
exención por trabajos en el extranjeroservicios intragrupoentidad no residentevinculaciónresidencia fiscal LIRPF — Ley 35/2006 del IRPF art. 7.pLIRPF — Ley 35/2006 del IRPF art. 9
Affects CompanyExpat · Non-residentIndividual
V2240-19 20 Aug 2019

Cannot reduce VAT taxable base if creditor-society link exists

SG de Impuestos sobre el Consumo
base imponiblesociedad concursadavinculaciónmodificación de base imponibleconcurso de acreedores LIVA — Ley 37/1992 del IVA art. 79.5LIVA — Ley 37/1992 del IVA art. 80.3
Affects CompanyExpat · Non-residentIndividual
V1701-18 14 Jun 2018

Requirements for exemption from foreign work income

SG de Impuestos sobre la Renta de las Personas Físicas
exenciónrendimientos del trabajoservicios intragrupoentidad no residenteestablecimiento permanente LIRPF — Ley 35/2006 del IRPF art. 7.pLIRPF — Ley 35/2006 del IRPF art. 9
Affects CompanyExpat · Non-residentIndividual
V0635-17 13 Mar 2017

Requirements for exemption from foreign work income (Art. 7.p LIRPF)

SG de Impuestos sobre la Renta de las Personas Físicas
exenciónrendimientos del trabajoservicios intragrupoentidad no residentedesplazamiento LIRPF — Ley 35/2006 del IRPF art. 7.pLIRPF — Ley 35/2006 del IRPF art. 9
Affects CompanyExpat · Non-residentIndividual

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