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V2405-14 11 September 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · arrendamiento de finca rústica

No withholding tax required for the lease of rural land with installations

An entity inquired whether it should apply withholding tax to the payment of a lease for rural land that included warehouses and sheds. The DGT has determined that, as this does not constitute a business lease, withholding is not applicable.

The question raised

Whether the income derived from the lease agreement is subject to withholding.

The DGT's ruling

The leasing of rural estates together with movable property is not subject to withholding, unless it is a business lease. For it to be a business lease, the object must be a patrimonial unit with its own life and immediate operation, which the lessor previously exploited. In this case, as it is a new activity requiring works, it is not considered a business lease and there is no withholding.

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