Skip to content
Back to index
V1865-14 11 July 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · valor normal de mercado

Rental income to be valued at market price; expenses subject to deductibility conditions

A Spanish company with only a rented property leased to its sole shareholder (resident in Germany) asks how to tax income and expenses. The DGT responds that income must be adjusted to market value due to the relationship, and expenses will only be deductible if they meet the requirements of accrual, correlation, accounting records, and justification.

The question raised

The question is raised as to how the consulting entity must be taxed, specifically whether the income derived from the rental activity and the expenses incurred for the development of said activity would be fiscally imputable.

The DGT's ruling

Income from the leasing of real estate to a shareholder must be included in the tax base, valued at its fair market value, pursuant to Article 16 of the TRLIS. Expenses derived from the lease shall only be deductible if they comply with the conditions of accounting registration, accrual-based imputation, correlation with income, and substantiation by invoice. Expenses that are not related to the generation of income or that are intended for the personal enjoyment of the shareholders shall not be deductible.

Book your free first meeting