Income from day or 24-hour care centers may be exempt from Corporate Tax

Non-profit entities operating specialized care centers must pay special attention to the nature of their income to ensure the correct application of the Corporate Tax (IS) exemption.

What the DGT has ruled

The Directorate General of Taxes (DGT) has analyzed whether income derived from the economic exploitation of day or 24-hour care centers is subject to tax. The ruling establishes that this income may be exempt as long as it is carried out in fulfillment of the entity's purpose and that such activity is included in the catalog of Article 7 of Law 49/2002.

Furthermore, the resolution indicates that income from auxiliary, complementary, or minor activities could also be exempt, provided that the limits and conditions established in the current regulations are respected.

What it means for you

For associations and non-profit entities, this criterion confirms that care activity is not automatically exempt simply by being a non-profit entity; rather, it depends on the direct link to its statutory purpose. The critical point lies in complying with the 40% limit on total income. This limit establishes that income not exceeding the net amount of the turnover from non-exempt economic exploitations unrelated to the entity's purpose must not exceed said percentage.

What should be done

It is necessary to conduct a detailed analysis of the entity's bylaws and the nature of each economic activity carried out. It must be verified that the care centers are aligned with the corporate purpose and that any other complementary activity remains within the margins of relevance and quantitative limits set by Law 49/2002 to avoid losing the tax exemption treatment.