Free services between society and its unique partner

The DGT points out that when the sole partner provides services without consideration to the company, the adjustment to market value determines the existence of a contribution of partners to the company and a greater value of participation in the company for the partner.

In an inspection, the income tax returns for the financial years 2010 to 2012 are regularized, adjusting the advertising and public relations services provided by a natural person to the limited liability company of which he was a sole and managing partner, as the company had not paid any compensation to the member.

It is considered whether the part of the accumulated reserves of the company until 12-31-2009, in the amount that would correspond to the professional services provided free of charge by the partner to the company, could be considered for tax purposes as contributions from partners and not as reserves from benefits.

In this sense, the valuation at market value of the services provided by the member to the company in the financial years 2006 to 2009 represents a return on the economic activity of the member by the market value of the professional services provided to the company, and a deductible expense in the company for said amount.

Likewise, in the absence of consideration for said services, the above adjustment determines the consideration of said services for their market value as contributions from partners, increasing in that amount the acquisition value of the partner’s participation in the company.

However, it should be noted that the above tax adjustments cannot be made if the years to which they refer are prescribed. Thus, once the prescription has been produced, neither the income of the natural person nor the income and expenses declared by the company can be modified.