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V1162-16 22 March 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento neto

Civil liability insurance premiums are deductible for Income Tax even after cessation of activity

A query was raised regarding whether premiums for mandatory civil liability insurance remain deductible following the cessation of an activity. The Directorate General for Taxes (DGT) ruled that, as they result from the exercise of the activity, they retain their status as deductible expenses.

The question raised

Consideration of professional association fees as a tax-deductible expense for Personal Income Tax purposes.

The DGT's ruling

The payment of civil liability insurance premiums is deductible for the purpose of determining the net income from economic activity, even if made after the cessation of said activity. This is applicable provided that the expenses have not been subject to deduction through provisions for risks and expenses under Corporate Income Tax. Since no activity is being carried out, there is no obligation to register in the census of entrepreneurs or to comply with formal obligations of entrepreneurs.

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