Members of a community of property cannot apply the reduction for income from economic activities

The application of tax benefits to reduce the taxable base of Personal Income Tax (IRPF) requires strict compliance with the requirements established in current regulations. Recently, the Directorate General of Taxes (DGT) has clarified the situation of those taxpayers who receive income derived from economic activities under the structure of a community of property.

What the DGT has resolved

The query concerned the possibility of applying the reduction established in Article 32.2.1º and 2º of the Personal Income Tax Law (LIRPF) when the income from the economic activity is not received individually, but through a community of property. After analyzing the regulations, the binding body has determined that such a reduction is not appropriate in this scenario.

The criterion is based on the nature of the community of property and how this income is integrated into the tax return of each of its members. Since the taxpayer is not the one exercising the activity directly and personally, but rather does so through an entity without legal personality, the factual assumption necessary for the use of this tax benefit is invalidated.

What it means for you

If you participate in a community of property and this develops an economic activity, the income attributed to you cannot benefit from the reduction for income from economic activities provided for in the LIRPF. This implies that the tax burden on that income will be higher than it would be if the activity were carried out individually or under other structures that allow access to this incentive.

What should be done

In light of this resolution, it is necessary to evaluate the legal structure under which economic activities are being carried out. The choice of the operating model has a direct impact on the optimization of the tax burden. It is recommended to analyze whether the current configuration of the community of property is the most efficient or if there are other alternatives that allow compliance with the regulatory requirements to access the reductions permitted by law. Each situation must be assessed individually to determine the real impact on the income tax return.