BIR Form 2307 for Financial Advisors and Fee-Based Wealth Managers: Which Withholding Rate Applies

A corporation that engages a fee-only financial advisor or wealth manager directly — paying a retainer or advisory fee rather than a product commission — withholds tax under the 5%/10% management-and-technical-consultant bracket, the same item this series covers for software developers and IT consultants. This is a different EWT item and rate threshold than the one that applies to a commission-based insurance agent, even when both work in financial services for the same client.

This guide is part of the BIR Form 2307 series. It covers why a fee-based advisor is withheld as a consultant, how engaging a wealth management firm changes the rate, how this differs from the insurance-agent commission bracket, and a worked corporate retainer example.

Is a financial advisor’s fee subject to withholding tax? #

Yes, when the advisor is compensated on a fee basis and engaged directly by a business — the engagement falls under Section 2.57.2(A) of RR No. 2-98’s management and technical consultant item, the same bracket used throughout this series for other individually engaged advisory professionals. A corporate treasury team retaining a financial advisor to review its investment policy, a family office paying an independent wealth manager a flat annual retainer, or a company engaging a financial planner to design an executive benefits program are all paying for advisory services under this consultant category, not a product sale.

The distinction that matters is how the advisor is paid, not the job title on their business card: a fee-only advisor who bills a retainer or hourly/project fee is a consultant for withholding purposes, while an advisor who earns commissions on insurance or investment products sold falls under a different rule covered below.

Individual advisor or wealth management firm — why the payee type changes the rate #

The ATC and rate depend on whether the actual payee is the individual advisor or a wealth management firm organized as a corporation, following the same individual-vs-entity split applied throughout this series.

A corporate client that engages an independent, individually registered financial advisor directly withholds at WI010/WI011. The same client paying an invoice from a wealth management firm organized as a corporation for identical advisory work withholds instead at WC010/WC011. The advisor files an Income Payee’s Sworn Declaration (Annex “B-1” or “B-2”) with the client to secure the lower 5% individual rate, the same mechanic covered in BIR Form 2307 for Professional Fees.

Why a financial advisor is withheld differently from an insurance agent #

A fee-based advisor’s retainer and an insurance agent’s commission are two different EWT items under RR No. 2-98, even though both roles frequently overlap in practice — many advisors also hold an insurance license and sell products alongside giving fee-based advice. As BIR Form 2307 for Insurance Agents and Adjusters covers, commission income tied to a product sale sits in its own dedicated EWT item with a separate ₱720,000 rate threshold. A client paying the same individual both a flat advisory retainer and a product commission in the same year may need to apply both ATCs to the respective portions of what they pay that person, rather than assuming one rate covers the entire relationship.

Who withholds on a financial advisor’s fee #

Any business engaged in trade or business that pays a fee-based financial advisor for services connected to that business is a withholding agent, under the same general withholding-agent test this series applies throughout the professional-fee bracket. RR No. 2-98 sets that test this way:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”

— RR No. 2-98, Section 2.57.3(A)–(B)

Common payors include:

• A corporation retaining an independent financial advisor to review its treasury, investment, or risk management policies
• A family office or holding company paying an individual wealth manager a fixed annual advisory retainer
• A company engaging a financial planner to design or review an executive compensation or retirement benefits program

An individual privately paying a personal financial advisor for their own household financial planning, outside any trade or business, is generally not a withholding agent, following the same trade-or-business test applied throughout this series.

Worked example: a corporate treasury advisory retainer #

Meridian Holdings Corp. engages Patricia Lim, an individually registered, fee-only financial advisor, for a flat ₱120,000 quarterly retainer to advise its treasury team on investment allocation and cash management policy. She bills directly under her own name and TIN and has a sworn declaration (Annex B-1) on file confirming her gross income for the year has not exceeded ₱3,000,000, so ATC WI010 at 5% applies.

Meridian Holdings remits the ₱6,000 withheld through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, and issues Ms. Lim a BIR Form 2307 each quarter showing ATC WI010 and the cumulative fees withheld, which she credits against her income tax due. Had Meridian instead engaged a wealth management firm organized as a corporation for the same retainer, the fee would be withheld at 10% (ATC WC010) instead, assuming the firm’s gross income for the year does not exceed ₱720,000 — ₱12,000 withheld under a corporate ATC.

Summary #

A fee-based financial advisor or wealth manager engaged directly by a business is withheld at 5%/10% (ATC WI010/WI011) as a management and technical consultant under RR No. 2-98 — a wealth management firm organized as a corporation draws 10%/15% (ATC WC010/WC011) instead. This sits in a different EWT item than an insurance agent’s or product-selling advisor’s commission, which carries its own ₱720,000 threshold, so a client paying the same person under both arrangements should apply the correct ATC to each. For the general consultant-fee mechanics this scenario builds on, see BIR Form 2307 for Software Developers and IT Consultants, and for the commission-based comparison, see BIR Form 2307 for Insurance Agents and Adjusters.