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Practical manual for Income Tax 2020.

2. Sales or provision of services

It includes all gross income, whether in cash or in kind, derived from the delivery of products that constitute the object of the activity, as well as, where applicable, those derived from the provision of work and services accessory to the main activity.

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

When consideration is involved and it is significantly lower than the normal market value of the goods sold and the services provided, they will be valued at their normal market value.

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

Associated 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 the 28th) must be taken into account, in which the following are considered linked persons or entities:

  • An entity and its partners or shareholders.
  • An entity and its directors or administrators, except with regard to remuneration for the performance of their functions.
  • An entity and the spouses or persons related by kinship, in a direct or collateral line, by consanguinity or affinity up to the third degree of the partners or participants, directors or administrators.
  • An entity and the directors or managers of another entity, when both entities belong to a group.

In cases where the link is defined based on the relationship of the partners or participants with the entity, the participation must be equal to or greater than 25%. The reference to administrators will include those de jure and those de facto. In cases where the link is not defined based on the relationship between partners or participants-entity, the percentage of participation to be considered will be 25%.

In these cases, the taxpayer of IRPF must comply with the documentation obligations of related-party transactions under 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 the 11th).

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.