The partnership structure (comunidad de bienes) is commonly used by groups of individuals who join forces to carry out an economic activity. When the partners (comuneros) are registered under the Special Regime for Self-Employed Workers (RETA), a question arises regarding the deductibility of RETA contributions paid by the partnership in the Personal Income Tax (IRPF).
Below, we analyze the deductibility of these contributions under both IRPF and Corporate Income Tax (IS), based on an official inquiry submitted to the Spanish Directorate-General for Taxation (DGT).
Are RETA contributions paid by a partnership deductible in personal income tax (IRPF)?
The agency clarifies that partnerships (comunidades de bienes) and civil societies (sociedades civiles) are not subject to personal income tax (IRPF) themselves, but are instead considered groupings of individuals who are directly attributed the income generated by the entity.
In this context, if the partners carry out an economic activity through the partnership, the income they receive from their work within the entity is not classified as employment income, but rather as part of their economic activity income.
Therefore:
These amounts are not considered deductible expenses for determining the net income of the activity at the partnership level.
Nor are Social Security contributions paid by the partnership deductible at that level, as both amounts are viewed as an increased share of the net income attributable to each partner.
However, the partners themselves may reduce the economic activity income attributed to them by the amount of those Social Security contributions.
Tax Treatment of RETA Contributions
Therefore, Social Security contributions under the Special Regime for Self-Employed Workers (RETA) incurred by the members of a partnership (comunidad de bienes) in the course of carrying out the activity should not be recorded as an expense by the partnership itself, but they can be used to reduce the net income attributed to each partner.
These contributions must be included in the individual advance tax payments of the members using Form 130.
Additionally, the partners must report the net income attributed by the partnership in Form 100, the annual personal income tax return (IRPF), deducting their own expenses related to the activity, provided such expenses can be properly justified before the Tax Administration.
It is important to keep these tax considerations in mind when managing a partnership (comunidad de bienes) and complying with the corresponding tax obligations.
In case of doubts or specific situations, our advisors at Vázquez y Manchón are here to guide you through the correct fulfillment of your tax duties.
