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V0242-19 6 February 2019 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

Wealth Tax exemptions for unincorporated entities require individual compliance by each participant

A taxpayer inquired whether they could apply for the business activity exemption within an unincorporated entity in which they hold an interest. The Directorate General for Taxes (DGT) ruled that each participant must carry out the activity on a regular, personal, and direct basis, and that it must constitute their primary source of income.

The question raised

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

The DGT's ruling

In entities without legal personality, the exemption provided in Article 4.Eighth.One of the LIP applies to each participant individually. Each must fulfill the requirements of carrying out the activity on a regular, personal, and direct basis, and that this constitutes their main source of income. The activity cannot be limited to the mere administration of assets, which in the scope of Social Security would determine the need for registration as a self-employed worker.

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