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V3008-20 6 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · actividad económica

Property leasing is an economic activity only if a full-time employee is hired

A property owner with 20 properties inquired whether the rental of her properties could be classified as an economic activity. The DGT ruled that it is only so if there is at least one employee under a full-time employment contract.

The question raised

1. For the purposes of Personal Income Tax, the classification of income derived from leasing.

The DGT's ruling

For the leasing of real estate to constitute an economic activity, it is necessary to employ at least one person under a full-time employment contract. If this requirement is met, the real estate could be exempt from Wealth Tax if it is necessary for the activity, if the activity is carried out on a regular, personal, and direct basis, and if it constitutes the taxpayer's main source of income. The allocation of assets to the activity is a matter of fact that must be assessed by the administration.

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