Grape producers making wine must pay tax under the simplified VAT regime

The transition from a purely agricultural activity to the production of processed products entails significant changes in tax treatment. The Dirección General de Tributos (DGT) has delimited the obligations of those owners of agricultural holdings who decide to transform their own grapes into wine.

What the DGT has ruled

The advisory body determines that the activity of transforming grapes into wine is not considered an agricultural activity, but rather an industrial manufacturing activity. This implies the following tax consequences:

• Economic Activities Tax (IAE): Producers must register under heading 425.1 of the IAE, corresponding to wine production.
• Value Added Tax (IVA): The wine production sector is considered a differentiated sector. Therefore, the activity is subject to the simplified VAT regime. The tax rate applicable to the sale of the final product is 21%.
• Personal Income Tax (IRPF): Both the original agricultural activity and the new transformation activity may determine their yield through the objective estimation method.

What it means for you

If you are the owner of an agricultural holding and plan to market wine produced from your own harvest, you cannot maintain the same tax treatment as you have for the sale of grapes. The regulations require a clear separation of activities. The transformation of raw material into a processed product changes the nature of the business before the Administration, forcing compliance with the obligations specific to an industrial and differentiated sector in the field of IVA.

What is advisable to do

In this scenario, it is necessary to evaluate the tax structure of the holding to correctly integrate the new activity. The corresponding registration in the IAE must be verified, and it must be ensured that the IVA settlement system adjusts to the simplified regime required for this sector. Since the transformation activity and the agricultural activity can coexist under objective estimation for IRPF, it is fundamental to analyze the accounting management of both yields to comply with current regulations.