Skip to main content
Practical Income Manual 2020.

2. Sales or provision of services

It includes all of the full income, whether in money or in kind, derived from the delivery of the products that constitute the object of the activity, as well as, where appropriate, those from the provision of work and ancillary services to the main activity.

In the case of remuneration in kind, both the tax valuation of said remuneration and the payment on account corresponding to it will be computed as full income, provided that it has not been passed on to the owner of the economic activity.

When there is consideration and it is significantly lower than the normal market value of the goods sold and the services provided, the valuation of the same will be carried out at their normal market value.

In economic operations carried out with a company with which relationships exist , in the terms provided for in article 18 of Law 27/2014, of November 27, on Tax on Companies ( BOE of 28), the owner of the activity must imperatively carry out its valuation at the normal market value. Normal market value will be understood as that which would have been agreed upon by independent persons or entities under conditions of free competition.

Related persons or entities:

To determine when there is a link, the provisions of article 18.2 of Law 27/2014, of November 27, on Corporate Tax ( BOE of 28), in which The following are considered persons or related entities:

  • An entity and its partners or participants.
  • An entity and its directors or administrators, except as regards remuneration for the exercise of their functions.
  • An entity and the spouses or people united by family relations, in a direct or collateral line, by consanguinity or affinity up to the third degree of partners or participants, directors or administrators.
  • An entity and the directors or administrators of another entity, when both entities belong to a group.

In cases in which the relationship is defined based on the relationship of the partners or participants with the entity, the participation must be equal to or greater than 25 percent. The mention of administrators will include those in law and those in fact. In cases in which the relationship is not defined based on the partner or participant-entity relationship, the percentage of participation to be considered will be 25 percent.

In these cases, the taxpayer of Personal Income Tax must comply with the documentation obligations of the related-party transactions in the terms and conditions established in Chapter V (articles 13 to 16) of the Corporate Tax Regulations. , approved by Royal Decree 634/2015, of July 10 ( BOE of 11).

Consideration of compensation or passed-on amounts of VAT :

  1. In the case of activities included in the special regime for agriculture, livestock and fishing of the aforementioned tax, the compensation received must be included among the corresponding income derived from sales or from the provision of work or services.
  2. If the activity is covered by the simplified VAT regime , the amount of the passed-on fees will not be counted as income.