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V3094-20 15 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · actividad económica

Property leasing is only an economic activity if full-time employment is provided

A query was raised regarding whether renting out residential and commercial properties could be classified as an economic activity if the taxpayer's son were hired. The DGT ruled that for it to qualify as an economic activity, it is necessary to employ a person under a full-time employment contract dedicated exclusively to said activity.

The question raised

Whether the income received from the leasing of dwellings and premises can be classified as income from economic activities for Personal Income Tax purposes.

The DGT's ruling

The leasing of real estate is considered an economic activity only when at least one employee is used under a full-time employment contract. The employee must be hired by the lessor and dedicate the full working day to the management of that activity. If the employee dedicates part of their working day to another professional activity, the requirements are not met and the income shall be classified as income from real estate capital.

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