4.2.4. D) Exempt assets and rights related to economic activities

This section will indicate the assets and rights, including real estate, necessary for the development of any economic activity carried out by the taxpayer, as well as the debts derived from it, which are exempt in the current fiscal year.

The exemption of the aforementioned assets and rights is subject to compliance with the following requirements on the date of accrual of the Tax (December 31):

1. Whether it is a business or professional activity

   Business and professional activities are considered to be those that have the nature of economic activities in accordance with the regulations of the Personal Income Tax.

   The leasing or sale of real estate shall be deemed to be an economic activity when the circumstances established for this purpose in article 27.2 of the Personal Income Tax Law and other tax regulations occur.

2. That the activity is carried out regularly, personally and directly by the taxpayer 

   The exemption will only apply to the taxpayer who owns the affected assets or rights and who carries out the activity on a regular, personal and direct basis, in accordance with the regulations of the Personal Income Tax.

   In the case of minors or incapacitated persons who are the owners of the assets, this requirement will be considered fulfilled when the activity is carried out on a regular, personal and direct basis by their legal representatives.

   When it comes to elements common to a marriage that are affected by an economic activity carried out by one of its members, the exemption will also be applicable to the spouse.

3. That said activity is your main source of income

   The exemption will only be applicable if the activity that the taxpayer carries out on a regular, personal and direct basis constitutes his or her main source of income.

   For these purposes, it will be understood that economic activity constitutes the main source of income when at least 50% of the amount of the taxable base of the Personal Income Tax for the year 2020 comes from net income from said activity.

   When the same taxpayer carries out two or more activities on a regular, personal and direct basis, the exemption may apply to all assets and rights related to them, although considering that the main source of income is determined by the sum of the income from all of them.

   For the purposes of calculating the main source of income, all remunerations that arise from the taxpayer's participation in the entities referred to in section "H. will not be included. "Exempt securities representing participation in the equity of legal entities", provided that the conditions required for the exemption to apply to them are met (without considering the requirement of minimum remuneration for management functions performed in the entity).

4. Whether it concerns assets and rights related to an economic activity

   Assets and rights related to an economic activity shall be considered to be those used for the purposes of said activity in accordance with the provisions of the Personal Income Tax Law, whether they are the exclusive property of the taxpayer or are jointly owned by the taxpayer and his or her spouse, taking into account the rules on ownership of assets established in article 7 of the Wealth Tax Law.

   As indicated above, when it comes to elements common to a marriage that are affected by an economic activity carried out by one of its members, the exemption will also be applicable to the spouse.

Completion

If the exempt asset or right is real estate, you must first mark it with an “X” in the box provided for this purpose.

If you have to relate more elements than those contemplated in the program, you can declare them cumulatively in the last box. In this case you will only have to fill in the data relating to the description and the valuation.

• IAE epigraph

  The heading, if it is a business activity, or the group, if it is professional, in which the activity is classified for the purposes of the Tax on Economic Activities will be indicated.

  Exceptionally, if the activity carried out does not require registration in the Economic Activities Tax, this box will be left blank.

• Password: When the exempt element is a property used for the activity, the key corresponding to full ownership or usufruct will be completed, as appropriate.
• % of Ownership/usufruct. If you have part ownership and part usufruct, the completion will be done by differentiating the percentage of ownership from the percentage of usufruct and filling in the data corresponding to each of them.
• Nature

  When the exempt element is a property used for the activity, this section will be completed using the following keys:

  U : urban property

  R : rustic property

• Situation

  One of the following keys will be selected:

  Key 1. Property with land registry reference located anywhere in Spain, except the Basque Country and Navarre.

  Key 2. Property located in the Autonomous Community of the Basque Country or in the Foral Community of Navarra.

  Key 3. IProperty located in the Autonomous Community of Navarra

  Key 4. Property without cadastral reference.

  Key 5. Property located abroad.

• Land registry reference number

  When the exempt element is a property used for the activity, the "Cadastral Reference" will be the one that appears on the Property Tax receipt.

• Description

  A brief description of the assets and rights, as well as the debts arising from the activity will be made.

• Value

  The value of the assets and rights will be determined by applying the general valuation rules relating to assets and rights affected by economic activities. If the affected asset is a property, the code corresponding to the value used will be indicated.

  This value will be reduced by the amount of debts arising from the activity. In no case will the amount of such debts be taken into account again for the purposes of determining the taxable base of the Tax.