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V1423-22 16 June 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento de la actividad económica

Grants for specific expenses are recognised as income in the tax year the expenses are incurred

A taxpayer has requested clarification on the timing of recognition for a grant received to cover business expenses. The Directorate General for Taxes (DGT) has ruled that, as the grant is intended for specific expenses, it must be recognised as income in the same tax year in which those expenses are incurred.

The question raised

Temporal allocation of the grant in the Personal Income Tax.

The DGT's ruling

Grants to finance specific expenses are recognized as income in the same fiscal year in which the expenses being financed accrue. To determine the temporal allocation, accounting regulations are applied, specifically Valuation Standard 18 of the General Accounting Plan. In this case, the grant is considered income from economic activity due to its origin.

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