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Practical Handbook VAT 2022

B) Concept of companies or professionals

The supply of goods or services must be carried out by a trader or professional in order to be subject to VAT.

Entrepreneurs and professionals are defined in a specific way in VAT.Thus, they are considered as such:

  • Those who carry out business or professional activities, unless they carry them out exclusively free of charge.

  • Trading companies, in the absence of proof to the contrary.

  • Those who exploit a tangible or intangible asset with a view to obtaining a continuous income over time.In particular, lessors of goods.

  • Those who develop land, promote, construct or rehabilitate buildings intended for sale, allotment or transfer, even on an occasional basis.

  • Private individuals who supply, on an occasional basis, a new means of transport exempt from tax because it is destined for another Member State of the European Union, who shall be entrepreneurs only in respect of this transaction.

The status of entrepreneur or professional, in the cases referred to in the first four indents, is acquired for the purposes of VAT, from the moment that goods or services are acquired with the intention, confirmed by objective elements, of using them for the development of the corresponding activities.


  • A private individual who rents out a garage or commercial premises he owns becomes a businessman for VAT purposes and must charge and pay the tax, as well as comply with the rest of the obligations that correspond to taxpayers of this tax.

  • Three persons who construct a building with three dwellings to be subsequently allocated as their main residence form a community of property which, for VAT purposes, will be considered as an entrepreneur.

  • The developer of a dwelling for his own use is not considered to be an entrepreneur as he does not intend to sell, assign or transfer the construction.

  • A public limited company that is going to engage in the activity of selling footwear and that acquires goods and services with the intention, confirmed by objective elements, of using them for this activity, has the status of entrepreneur or professional as soon as it makes the aforementioned acquisitions, even if it has not yet carried out any operation of selling footwear.

Qualification of the relationship between partner and company

The determination of whether an employment relationship or a professional activity within the scope of VAT is involved must be based on a case-by-case analysis, on the basis of the indications set out in the case law of CJEU (Cases C-235/85, C-202/90, C-355/06).

In the case of natural persons who provide their professional services to a company of which they are the majority shareholder, where they both carry out an activity of a professional nature, the relationship between the partner and the company must be classified as an employment relationship (not being subject to VAT), if, on the basis of the terms agreed between them, it appears that:

  • The professional is subject to the organisational criteria of the entity,

  • It does not receive significant financial compensation linked to the results of its activity, and

  • Liability vis-à-vis third parties rests with the company.

(Tax Directorate General consultations V2166-15, V0086-16 and V0482-16).