The High Court of Justice of Madrid has carried out a thorough analysis of the correction undertaken by the Administration, as a result of the detection of related-party transactions. In particular, it has focused on determining whether the actions performed can be considered as highly personal services. In this context, the Chamber has expressed its disagreement with the conclusion reached in the liquidation, since the elements present in the liquidation do not support the notion that we are in the presence of highly personal services. One of the key factors in this consideration is the finding of a considerable number of professional services that the appellant company has contracted with third parties, as acknowledged in the liquidation.
It is relevant to point out that the order forms submitted as evidence present generic subscriptions in relation to company A, which, according to the Chamber, is not sufficient to deduce that the services in question are very personal and exclusively attributable to the individual partners of companies B and C.
The Administration, on the other hand, has argued that the professional legal services have been rendered by the individual partners of companies B and C. However, this assertion is not consistent with the contractual content submitted as evidence, nor can it be inferred from the existence of subcontracted professional services. The appellant subcontracted a plurality of professional services to various professionals and entities, which makes it difficult to consider that the aforementioned partners directly provided the legal services in question.
In light of this reasoning, the Chamber concludes that the valuation adjustment implemented by the Administration in relation to the transactions between appellant A and entities B and C is not in accordance with the law. By virtue of this conclusion, the claim filed is upheld, which means that the contested decision is declared unlawful and, consequently, its annulment is ordered, as well as the invalidity of the settlements deriving from the said valuation adjustment in the transactions between the appellant company A and entities B and C.
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