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V0387-19 21 February 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · retención

Water sales by individuals are not subject to Corporate Tax withholding

A water distribution company has enquired whether it must apply withholdings when purchasing water from an individual. The DGT clarifies that the classification of the seller's income depends on whether an economic activity is being carried out and that there is no obligation to withhold for Corporate Tax.

The question raised

What is the tax classification of the income obtained by the natural person from the sale of water to the consulting entity, a water distributor.

The DGT's ruling

The income of the natural person may be a capital gain or income from an economic activity, depending on whether they organize means of production and human resources. Under Personal Income Tax (IRPF), there is no obligation to apply withholdings for these payments. Under Corporate Income Tax, the acquisition of water is not included in the categories of income subject to withholding.

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