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V0177-21 4 February 2021 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · arrendamiento de negocio

No withholding tax on business leases if requirements for patrimonial unity and economic activity are met

The applicant asks whether withholding tax applies to a service station lease paid per litre sold. The DGT determines that if it is a lease of real estate rather than a business lease, the obligation to withhold tax does exist.

The question raised

Whether we are obliged or not to withhold the amount resulting from the application of the aforementioned rate.

The DGT's ruling

For there to be no withholding in a business lease, two requirements must be met: that the object is a patrimonial unit with its own life and prior operation, and that the lessor carries out the activity on a continuous basis with its own organizational structure. In this case, as the lessee is the one initiating the activity, it is classified as a real estate lease, which entails the obligation to withhold according to the nature of the land.

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