A way to share costs between entrepreneurs or independent professionals
A Community of Expenses is a contractual relationship in which several business owners or professionals, acting independently and autonomously, agree to share certain costs.
This is a common practice among professionals seeking synergies with other colleagues and sharing an office, but it can also occur among start-ups or other companies as a way to save money.
Therefore, this does not involve the creation of any entity with its own legal personality. The business is owned by the members of the Community, who are the ones who carry out the activity. The Community simply becomes a vehicle for the stated purpose.
Creation
The existence of this Community may be proven by any means of evidence and may take different legal forms. In any case, it is advisable to sign a contract that includes its fundamental elements (name, identity of the members, purpose, degree of participation in costs, duration, termination, etc.).
Next, you must request a NIF (Tax Identification Number) and inform the Tax Office, using form 036, of the tax obligations you must fulfill.
What tax obligations do they have?
Although Expense Communities do not constitute, as such, a legal entity independent of their members, they can nevertheless be considered liable for tax purposes.
a) In the area of Personal Income Tax:
Unlike a joint ownership arrangement, this is not an entity subject to income attribution. As mentioned, it is not an entity that carries out a business activity, but rather several taxpayers who conduct their business independently and whose only contribution is to cover shared expenses.
In this way, the income obtained by each of the members will correspond to and must be declared directly by them.
Regarding expenses, in determining the net income of the activity of each of the members, these must be imputed, both the expenses that they fully cover, as well as the proportional part of the common expenses that correspond to them based on their participation in the Community, always to the extent that they are considered deductible.
As stated in CV DGT 2093/11, it will be necessary to prove that the common expenses are indeed common and that they are paid in the percentage agreed upon by each of the partners. This must be verified through any means of proof admissible in law (art. 106 LGT).
The accounting, registration and information obligations for the purposes of this tax will therefore correspond individually to each of the taxpayers who carry out the activity.
It should be noted, however, that the Community of expenses must withhold all income that it pays directly and that is subject to withholding or payments on account, which must be taken into account when communicating its census obligations and submitting the corresponding tax returns.
b) In the area of Value Added Tax:
The operation of a Joint Expenses Association involves the procurement of goods and services, in its own name, with the aim of distributing these expenses among its members in a previously agreed proportion. This activity of passing on expenses is considered subject to Value Added Tax, and is interpreted for these purposes as the provision of services, in its own name, to its members.
Therefore, the entity must issue VAT, will be considered a liable party for VAT and must comply with all the obligations arising from this condition contained in Article 164 of Law 37/1992, including the census declarations of start, modification and cessation, obtaining NIF, issuing invoices, VAT records for input and output or settling the corresponding declarations.
For their part, the members of the Community must also comply with the obligations arising from their status as independent taxpayers.
c) In the area of the Tax on Economic Activities:
For the purposes of this tax, the Community is considered not to carry out any economic activity, so it will not be necessary to register it for IAE purposes.
If you require our assistance to obtain more information or have any questions, please contact us via email at ambit@ambitassessor.com or at our offices.
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A graduate in Law and with a Master's degree in Tax and Financial Management from the University of Barcelona, he also holds a Postgraduate Diploma in New Technologies Law from ESADE. He specializes in tax and corporate law.
Before joining Àmbit Assessor as manager in 1999, he worked as head of the Tax and Accounting department at the Busquets Terradellas law firm.
For years, he combined his work with teaching, serving as a professor of Public Finance and Tax Law at the Open University of Catalonia.
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