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Practical manual for Income Tax 2021.

1. Operating income

This is considered to be the total amount of income derived from the sale of goods or provision of services that constitute the actual object of the activity, including, where applicable, those from services accessory to the main activity.

See registration and valuation standard 14 of the General Accounting Plan, approved by Royal Decree 1514/2007, of November 16 (BOE of the 20th), dedicated to income from sales and provision of services.

According to this standard, income from the sale of goods and the provision of services will be valued at the fair value of the consideration , received or to be received, derived from them, which, unless there is evidence to the contrary, will be the agreed price for said goods or services, less the amount of any discount, reduction in price or other similar items that the company may grant, as well as the interest incorporated into the nominal value of the credits. However, interest incorporated into trade credits with a maturity of no more than one year that do not have a contractual interest rate may be included when the effect of not updating the cash flows is not significant.

Taxes levied on sales of goods and provision of services that the company must pass on to third parties, such as Value Added Tax and Special Taxes, as well as amounts received on behalf of third parties, will not form part of income .

When consideration is involved and it is significantly lower than the 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 there are relationships of connection in the terms provided for in article 18 of the LIS , operations between related persons or entities will be valued at their market value. Market value shall be understood as that which would have been agreed upon by independent persons or entities under conditions that respect the principle of free competition. 

In these cases, the owner of the activity must comply with the documentation obligations of related-party transactions under the terms and conditions established in Chapter V of Title I (Articles 13 to 16) of the Corporate Tax Regulations, approved by Royal Decree 634/2015, of July 10 ( BOE of the 11th).

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).