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V1267-20 5 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · subrogación empresarial

Business succession does not imply two separate payers for income tax filing thresholds

A query was raised regarding whether business subrogation results in having two separate payers for the purpose of determining Personal Income Tax (IRPF) filing obligations. The Directorate General for Taxes (DGT) ruled that the transferee company is considered the same payer for determining both the withholding rate and the filing threshold.

The question raised

For the purposes of determining the obligation to file the 2019 Personal Income Tax (IRPF) return, the inquiry concerns whether there is one or two payers as a consequence of business subrogation.

The DGT's ruling

In cases of business succession, the transferee company maintains the status of the same payer for the purposes of determining the applicable withholding rate. Therefore, to determine the obligation to file a tax return pursuant to Article 96 of the Personal Income Tax Law (LIRPF), the limit of 22,000 euros applies instead of the limit of 14,000 euros. If total earnings do not exceed 22,000 euros, there is no obligation to file a tax return.

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