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V3048-20 8 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · reducción por inicio de actividad

Activity commencement reduction ineligible if over 50% of income comes from a former employer

A query was raised regarding whether the reduction for starting a new activity applies when income is derived from an entity that paid salaries the previous year. The DGT ruled that the reduction does not apply if more than 50% of the income originates from said entity.

The question raised

Application of the reduction for the commencement of an activity provided for in section 3 of Article 32 of the Personal Income Tax Law, when income is obtained from an entity from which employment income was received in the year prior to the date of commencement of the activity.

The DGT's ruling

The 20% reduction for the commencement of an activity shall not be applicable in the tax period in which more than 50 percent of the income derives from a person or entity from which the taxpayer had obtained employment income in the year prior to the date of commencement of the activity. This limit applies when the income from economic activities originating from said former employer exceeds 50 percent of the income from all economic activities carried out by the taxpayer.

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