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V2474-24 9 December 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · expropiación forzosa

Compensation for the compulsory purchase of a property used for economic activity constitutes a capital gain or loss

A query was made regarding the tax treatment of compensation received from the compulsory purchase of a rural property used for agricultural activities. The Directorate General for Taxes (DGT) ruled that this must be treated as a capital gain or loss rather than income from an economic activity.

The question raised

Tax treatment in the Personal Income Tax (IRPF) of the compensation received.

The DGT's ruling

The expropriation of a property used for an economic activity generates a capital gain or loss by altering the composition and value of the assets. The calculation is performed based on the difference between the fair compensation and the acquisition value (acquisition cost plus investments and improvements, minus depreciation). The temporal imputation occurs when the occupation of the asset takes place, although special rules exist if the fair compensation is subject to appeal.

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