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V3415-20 24 November 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · arrendamiento de negocio

No income tax withholding required for the lease of rural land as an isolated asset

A query was raised regarding whether income tax (IRPF) withholding should apply to the lease of rural land to an entity for the installation of a wind turbine. The Directorate General for Tax (DGT) ruled that if the land is leased as an isolated patrimonial asset, there is no obligation to withhold tax.

The question raised

It asks whether withholding tax should be applied to Personal Income Tax for the income received derived from the lease.

The DGT's ruling

If the contract is a business lease, where an economic unit with its own life is transferred, the income is subject to a 19% withholding tax. However, if the rural land is leased as an isolated patrimonial asset, the yields are not subject to withholding, regardless of whether they are classified as economic activities or real estate capital, as they do not appear in the list provided in Article 75 of the RIRPF.

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