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V0965-18 12 April 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

Wealth Tax exemption does not apply to property rental activities without hired staff

A query was raised regarding whether retirement is compatible with the Wealth Tax exemption for a commercial property rental activity. The Directorate General for Taxes (DGT) ruled that the exemption is not applicable if the requirements for an economic activity are not met.

The question raised

Compatibility of retirement, without the activity being carried out on a personal and direct basis, with the exemption from Wealth Tax. Applicability of the reduction provided for in the Inheritance and Gift Tax Law in the event of death.

The DGT's ruling

For assets to be exempt from Wealth Tax, the activity must be carried out on a regular, personal, and direct basis and be the main source of income. In the case of real estate leasing, classification as an economic activity requires the employment of a person under a full-time employment contract. As these circumstances are not met, the exemption is not applicable.

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