Risk of losing the lump-sum unemployment payment exemption when switching from a company to a self-employed professional

The transition from an economic activity managed through a company to an individual entrepreneur model carries tax implications that are not always evident. Recently, the Dirección General de Tributos (DGT) has clarified the consequences of this change regarding the exemption for lump-sum unemployment payments.

What the DGT has ruled

The query analyzed whether moving from exercising an activity through a company to developing it as a self-employed worker affected the exemption established in Article 7.n) of Law 35/2006 (LIRPF). The DGT's criteria is decisive: this change in structure would break the right to the lump-sum unemployment payment exemption.

The administration maintains that, by modifying the way the economic activity is carried out, the necessary condition to maintain the tax benefit is lost. Consequently, the interested party is obliged to regularize their tax situation in accordance with Law 58/2003 General Tributaria.

What this means for you

If you have received unemployment compensation under the protection of the exemption in Article 7.n) and decide to close your company to continue your activity as a self-employed professional, you must be aware that said exemption could be invalidated. This implies that the amounts that previously were not taxed must be integrated into the taxable base of the Personal Income Tax (IRPF).

The financial impact occurs in the period in which the breach of the five-year term required by the regulations takes place. In practical terms, the taxpayer must include these exempt amounts in their IRPF self-assessment corresponding to the fiscal year in which the change of activity occurs.

What should be done

In the event of a change in the business model that involves moving from a company to an individual entrepreneur, it is fundamental to evaluate the tax impact of previously applied exemptions. It is recommended to:

• Analyze the continuity of the economic activity and its impact on the LIRPF regulations.
• Verify if the change in structure constitutes a breach of the requirements to maintain previous tax benefits.
• Assess each particular situation to determine the exact moment for tax regularization.