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V3212-14 1 December 2014 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

Wealth Tax exemption denied if property rental activity is not classified as an economic activity

A taxpayer inquired whether their property rental company could qualify for a Wealth Tax exemption. The DGT ruled that it cannot, as the rental activity is not considered an economic activity due to the lack of the required minimum infrastructure.

The question raised

Question posed In relation to the leasing activity, issues referred to the employment category of the employee, the existence of a minimum remuneration for the performance of administrator functions, the potential incompatibility of such functions with the operation of the pharmacy office, and the obligation to state in the company's Articles of Association whether the position of Administrator is remunerated or not. Likewise, the necessity for all real estate properties to be leased in order to consider them assigned to the activity.

The DGT's ruling

For the leasing of real estate to constitute an economic activity, there must exist a premises dedicated to management and at least one employee under a full-time employment contract. In the absence of such an organization of personal and material resources, the activity is not considered economic for Personal Income Tax purposes. Therefore, the exemption from Wealth Tax is not applicable. The assignment of real estate requires that the assets be necessary to obtain income, even if this does not strictly depend on their actual leasing.

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