VAT on services rendered to the company by an employee who is a partner/director? It depends

The Spanish Tax Agency (AEAT) has stated that whether services provided to a worker-owned and managed company are subject to VAT will depend on the specific case. In a recent consultation, a person asked whether they and their partner, who are both solidary administrators of an electrical installation company, would be considered entrepreneurs or professionals for VAT purposes, and whether the fees they received for their services would be subject to VAT. The AEAT replied that if the partners’ services to the company are fundamental to the business and difficult to distinguish from the company’s own assets, then the services may be excluded from VAT. However, if the partners are not subject to the company’s organizational criteria, receive significant economic compensation linked to their activities, and are responsible for third-party liabilities, then their services would be subject to VAT. The AEAT emphasized that each case must be analyzed individually, taking into account all relevant circumstances.

Source: audiconsultores-etlglobal.com (page 16)

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