Tax treatment in Personal Income Tax and VAT of the assignment of an office


Binding tax ruling V3128-16, issued by the Spanish General Tax Directorate of July 5 2016.

Mother of the consultant has given him an office to make use of it as a professional firm. The assignee (son) would pay as rent only an amount corresponding to the following property expenses: Property Tax, owner community fees and electricity fees.

Concerning the Spanish Personal Income Tax, is consulted on taxation of the transfer and the deductibility of expenses for purposes of the determination of the net income of economic activity.

Article 22 of the Spanish Personal Income Tax Law mentions that shall be considered as gross income capital gain from real estate, the ones coming from the assignment of rights or powers of use or enjoyment of immovable property.

In addition, article 23 of the same law, mentions that shall be considered as deductible expense for the determination of the net capital gain from real estate all costs necessary to obtain it. Being included within said expenses Property Tax, electricity fees and owner community fees.

In this sense, the assignor (mother) computed them incomes received by his son as gross income capital gain from real estate being, at the same time a deductible expense, by what if apply this criterion, the performance net of the net capital gain from real estate would be zero.

However the above, article 24 of the Spanish Personal Income Tax establishes that when the transferee of the property is a relative, the total net capital gain may not be less than the following:

– 2% of the cadastral value, or

– 1.1% of the cadastral value if it has been reviewed

In the present case, the assignor (mother) must consider the net income capital gain of real estate following the criteria of kinship of this article.

On the other hand, with regard to VAT, the consultant wants to know if the cession of the premises is subject to the tax.

Shall be considered as taxable event for VAT supplies of goods and of services carried out in the Spanish VAT Territory by entrepreneurs for consideration, in the development of its commercial activity, even if they are carried out on behalf of the members, partners, members or partners of entities performing them.

With respect to the concept of entrepreneur or professional, article 5 of the Spanish VAT Law mentions that it shall be treated as businessmen or professionals, for the purpose of this tax, who made one or more supplies of goods or services involving the exploitation of a good personal or intangible property in order to obtain income periodically. In particular, lessors of goods will have such consideration.

In this sense, the Authorities conclude that due to the fact that the transfer of the office is for consideration, and that that transaction qualifies to the mother of the consultant as entrepreneur or professional for the purposes of VAT, this transaction would be considered as subject and not exempt from VAT.

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V3128 16

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