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V2782-17 27 October 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos de actividades económicas

Compensation for work materials is business income, while compensation for premises is a capital gain or loss

A taxpayer inquired about the tax treatment of compensation received for damage to painting materials and the premises where they were stored. The DGT ruled that the treatment depends on whether the assets were business inventory or capital assets.

The question raised

Taxation in the Personal Income Tax (IRPF) of the compensation.

The DGT's ruling

Compensation for materials that constitute inventory of an economic activity constitutes full income from the activity, from which its acquisition cost may be deducted. Regarding compensation for damages to the premises, the difference between the amount received and the proportional part of the acquisition value of the damage is computed as a capital gain or loss. If the compensation coincides with the repair cost, no capital gain or loss occurs.

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