Estimated returns from work and related operations
Estimated work yields
Regulations: Articles 6.5 and 40 Law PIT
Services that may generate income from work are presumed to be remunerated, unless proven otherwise.
Unless proven otherwise, the valuation of said returns will be carried out at their normal market value, the normal market value being understood as the consideration that would be agreed between independent parties, unless proven otherwise. However, the valuation of certain estimated remuneration paid in kind will be carried out applying the special valuation rules set out in the next section (Income from in-kind work) are discussed.
Income from employment in related-party transactions
Regulations: Article 41 of the Law PIT
In cases where personal work is provided to a company with which there are related parties, under the terms provided for in Article 18 of theLISTransactions between related parties 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 of free competition.
Regarding theLIS See Law 27/2014, of November 27, on Corporate Income Tax.
In accordance with Article 18 of the LIS Linkage relationships occur in operations carried out between:
- An entity and its partners or participants,
- An entity and its de jure and de facto directors or administrators,
- An entity and the spouses or persons related by blood or marriage 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.
When the link is defined based on the partner-company relationship, the partner's participation must be equal to or greater than 25 percent.
In the case of remuneration for the performance of their duties as directors or administrators of entities, the rules of related-party relationships do not apply, because this is expressly established in Article 18.2 of the LISTherefore, these payments are excluded from the scope of related-party transactions regulated in Article 41 of the Law PIT.
The Tax Administration may verify that transactions carried out between related parties have been valued at their normal market value and will, where appropriate, make the necessary valuation adjustments with respect to transactions subject to Corporation Tax. PIT or to the Non-Resident Income Tax that have not been valued at their normal market value. For this purpose, the taxpayer of PIT must comply with the documentation obligations for related-party transactions under the terms and conditions established in Chapter V (Articles 13 to 16) of the Corporate Income Tax Regulations, approved by Royal Decree 634/2015, of July 10 (BOE July 11).