Real estate income under the special regime for displaced workers: taxation on gross amount

The Directorate General of Taxes (DGT) has issued a relevant ruling for taxpayers filing under the special regime for displaced workers in Spain. The inquiry focuses on determining whether the real estate capital income obtained by these individuals should be declared for its net amount, after deducting expenses, or for its gross amount.

What the DGT has ruled

The DGT has established that, for taxpayers under the special regime provided for in Article 93 of the Personal Income Tax Law (Ley del IRPF), real estate capital income must be determined by its gross amount. The body points out that the possibility of deducting expenses established in Article 24.6 of the TRLIRNR is not applicable in this case.

The technical reason lies in the nature of the rule: the aforementioned deduction of expenses is exclusive to those residing in other Member States of the European Union. Since individuals using the special regime for displaced workers are considered residents in Spain, they cannot benefit from said deduction, which requires declaring the total income received without applying the usual deductible expenses.

What this means for you

If you are a displaced professional or worker using the special regime of Article 93 of the LIRPF and you own properties that generate income, your tax burden on this income will be higher than usual. Since you cannot subtract the expenses associated with obtaining said income, the taxable base on which you will pay tax will be the total income received.

What you should do

It is necessary to analyze the structure of your real estate income and its impact on your tax return under this specific regime. The application of the regulations requires a clear distinction between tax residence and the taxation regime applied. It is recommended to assess each particular situation to ensure that the calculation of income strictly adheres to current regulations and avoids errors in the tax settlement.