BackThe case presented is the judgment of December 14, 2022, in which the High Court of Justice of Madrid studies whether or not the related-party transaction carried out with respect to the partnership-company relationship is correctly valued, as well as the appropriateness of the secondary adjustment made.
The Court establishes that the services rendered were the same as those that the company invoiced to the clients. In this way, the plaintiff company had not provided any added value in relation to the obtaining of income, so it is not allowed to use a company that only counts as a means with its partner, due to the fact that what is intended is not to apply the progressive tax rates of the Personal Income Tax (IRPF) with those of the Corporate Income Tax (Impuesto sobre la Renta de las Personas Físicas).
The Inspection highlighted this fact and deducted from the company’s income the amount of the expenses incurred to obtain it.
Due to this, the Chamber explains that it is not a contradiction to have deductible expenses of the partnership and to deny, at the same time, that the partnership added value to the services rendered by the partner. It is a matter of evidence that the expenses incurred must be deducted because otherwise the partner would be charged with income greater than that obtained.
In relation to the secondary adjustment, due to its market valuation of the services, the excess contribution made by the partner is considered as income for the company because it benefits the other partners who have contributed nothing to the company, so that the tax classification is that of a donation and it is treated as a liberality, that is to say, as income that must be included in the taxable base of the Corporate Income Tax.
The Court also points out that it is a fact that cannot be disputed that the transfer was made to an account in which the partner was not the owner. The account holder is the sole owner of the funds, while the attorney-in-fact can only operate in the same name as the account holder.
Finally, in this case the owner was the owner of the destination account and not the partner himself, so that the restitution of assets was not made, which requires that the restitution be made by a partner and not by a third party.
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