Renting textile garments to companies must be taxed under heading 856.1 of the IAE

The correct classification of an economic activity in the Business Activities Tax (IAE) is fundamental to avoid discrepancies with the Tax Administration. Recently, the Dirección General de Tributos (DGT) has issued a binding ruling to resolve the doubt regarding which heading companies dedicated to renting textile garments to other companies should use.

What the DGT has resolved

The query sought to determine which headings of the tax companies providing this service should register under. After analyzing the current regulations, the DGT has resolved that the activity of renting textile garments to companies must be registered under heading 856.1 of the first section of the Tariffs.

This heading is specifically intended for the rental of consumer goods and, within its scope, includes the rental of clothing as a specialized service. The resolution is based on the Business Activities Tax Regulations (RD Leg. 1175/1990) and the Consolidated Text of the Law on the Legal Regime of Local Treasuries (TRLRHL Royal Legislative Decree 2/2004).

What this means for you

If your company carries out the activity of renting clothes or textiles to other entities, you cannot choose any heading for the rental of movable goods. The Administration requires the use of heading 856.1 due to the nature of the rented merchandise, which is classified as a consumer good.

An erroneous classification in the IAE could lead to inconsistencies in the company's tax information and possible requests from the tax authority to rectify the registration data.

What should be done

It is necessary to verify that the company's registration in the IAE exactly matches the actual activity being carried out. In the event that the company is operating under a heading different from the one established in this ruling, the adequacy of the registration data should be assessed to comply with current regulations. Each business situation requires an analysis of its specific activity to ensure that the selected heading is the correct one.