FEDER Canary Islands 2021-2027 Program grants will be taxed as capital gains

The receipt of public aid intended for the green transition in the Canary Islands has raised doubts regarding its tax treatment. Following the recent resolution by the Dirección General de Tributos (DGT), the treatment these amounts must receive in the personal income tax return has been defined.

What the DGT has resolved

The tax authority has determined that obtaining a grant from the FEDER Canary Islands 2021-2027 Program constitutes a capital gain. This criterion is based on the fact that the aid represents a variation in the value of the beneficiary's assets without constituting a type of income different from those already classified.

The amount that must be included in the taxable base is the actual cash amount received. Likewise, the regulations establish that the temporal imputation must be made in the tax period in which the collection of the aid occurs, given that these grants are not included in the exemptions provided for in the fifth additional provision of the Law on Personal Income Tax (IRPF).

What this means for you

If you are an individual who has received these grants for the green transition, you must keep in mind that the money received is not exempt income. As it is a capital gain, the amount will be integrated into the taxpayer's general income, which will increase the taxable base upon which the tax is calculated.

The obligation to declare these amounts arises at the moment the payment is made effective. Therefore, it is necessary to correctly identify the fiscal year in which the income is received to avoid errors in the tax settlement.

What you should do

Upon receiving these aids, it is necessary to verify the exact amount received and the timing of the collection to ensure correct integration into the tax return. Since the tax treatment depends on the nature of the aid and its integration into general income, each situation must be analyzed to determine the exact impact on the taxpayer's tax burden.