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V0241-19 6 February 2019 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención por actividad económica

Wealth Tax exemption does not apply if the activity manager is a co-owner

A co-owner of a community of property engaged in real estate leasing has asked whether they can apply for the economic activity exemption. The Directorate General for Taxes (DGT) has ruled that the requirement to employ at least one person under a full-time employment contract is not met if the manager is one of the co-owners themselves.

The question raised

1) Application of the exemption provided for in Article 4.Eight of Law 19/1991, of June 6, on Wealth Tax.

The DGT's ruling

For the leasing of real estate to constitute an economic activity, it is required to employ at least one person under a full-time employment contract, whereby the management tasks performed by the lessors themselves shall not count towards this requirement. In a community of property, each co-owner must individually satisfy the requirements for the exemption, including exercising the activity on a regular, personal, and direct basis, and that it constitutes their principal source of income. The fact that a co-owner is the hired employee does not allow for the fulfillment of this requirement for the exemption.

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