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V2074-18 12 July 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento neto

Compensation for livestock slaughter treated differently for sale vs breeding stock

A livestock farmer has requested clarification on how to declare compensation received for the slaughter of livestock. The Directorate General for Taxes (DGT) distinguishes between livestock intended for sale, which constitutes business income, and breeding stock, which results in capital gains or losses.

The question raised

Tax treatment to be applied to the compensations received.

The DGT's ruling

If the livestock is for sale, the compensations are income from the activity and are calculated as gross income. If it is breeding livestock (fixed assets), the insurance compensation generates a capital gain or loss based on the difference with its net book value. The compensation from the Autonomous Community for mandatory sacrifice does not integrate into the taxable base if there had been a capital gain, but if there was a loss, the negative difference between said loss and the aid is integrated.

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