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V1174-17 17 May 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retención

No income tax withholding required for activities under the first section of the IAE

A taxpayer engaged in graphic arts (heading 475 of the first section of the IAE) inquired whether they are required to apply withholdings. The DGT ruled that, as it is a business activity rather than a professional one, there is no obligation to withhold.

The question raised

Obligation to practice or not practice withholding on the gross income of the aforementioned activity.

The DGT's ruling

Income from professional activities is subject to withholding, but income of an entrepreneurial nature is not. Activities included in the first section of the IAE Tariffs are classified as income from business activities. Therefore, the income from the activity in question is not subject to the obligation to withhold or pay on account.

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