Deductibility of securities administration expenses for usufructuaries in Personal Income Tax

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the management of expenses derived from holding negotiable securities in usufruct situations. The inquiry focuses on determining whether securities administration and custody expenses can be deducted from income from movable capital in Personal Income Tax (IRPF).

What the DGT has ruled

The advisory body has established that administration and custody expenses for negotiable securities are deductible for the usufructuary. The basis for this decision lies in the fact that, according to civil regulations, the income belongs to the usufructuary and, consequently, they have the obligation to pay the expenses necessary for its receipt.

However, the DGT introduces an important limitation: these expenses will not be deductible if they correspond to discretionary and individualized investment portfolio management. Furthermore, it is clarified that the bare owner cannot exercise this deductibility, given that the income does not belong to them.

What this means for you

This ruling has a direct impact on individuals who hold the usufruct of shares or negotiable securities and receive dividends. For these taxpayers, the possibility of subtracting custody and administration costs from the taxable base of their income from movable capital represents an optimization of their tax burden.

It is essential to distinguish the nature of the expense. While standard custody and administration costs are deductible, those linked to personalized portfolio management are excluded from this possibility.

What you should do

When holding these types of assets, it is necessary to:

• Correctly identify the ownership of the income to ensure that the deduction is applied to the correct taxpayer.
• Differentiate between ordinary administration expenses and discretionary portfolio management costs.
• Retain all documentation proving the nature of the expenses to avoid contingencies before the Tax Administration.

Each wealth situation presents particularities that require a specific analysis to determine the correct application of current regulations.