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V2212-22 21 October 2022 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · arrendamiento de industria

Leasing of industrial equipment is not subject to Corporation Tax withholding if it constitutes a business activity

A query was raised regarding the timing of income recognition for rents collected in advance and the application of withholding tax in an industrial lease. The DGT determines that income is recognised based on accounting accruals and that no withholding tax applies if the business lease constitutes an economic activity with its own structure.

The DGT's ruling

Income from industrial leasing must be included in the tax base of the period in which it accrues according to accounting regulations. In order for no withholding tax to apply under Corporate Income Tax, the contract must be an industrial lease (a patrimonial unit with its own life) and the activity must constitute an economic activity for the company, possessing its own organizational structure. Industrial leasing is considered a service provision subject to VAT at the general rate.

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