Reduction for returns with a generation period of more than two years or obtained in a notoriously irregular manner over time

Regulations: Articles 26.2 Law IRPF and 21 Regulation

Yields to which the reduction is applied

When the income that is included in the general tax base has a generation period of more than two years, as well as when it is classified by regulation as having been obtained in a notoriously irregular manner over time, its net amount will be reduced by 30% , when, in both cases, it is imputed in a single tax period.

For these purposes, the following are considered to be income from movable capital, obtained in a notoriously irregular manner over time, exclusively, provided that, in addition, they are imputed in a single tax period:

1. Amounts obtained from the transfer or assignment of the lease contract.
2. Compensation received from the tenant or subtenant for damages or defects, in the case of leasing.
3. Amounts obtained from the creation or transfer of lifelong rights of use or enjoyment.

Maximum amount of performance to which the reduction applies

The amount of net income to which the reduction will be applied may not exceed the amount of 300,000 euros per year .

In the event that several irregular returns of the same nature are obtained, and their amount exceeds the limit of 300,000 euros of maximum amount on which to apply the 30% reduction, the maximum reduction will be distributed proportionally between all the returns of that nature.

Transitory rules: Income received in installments before January 1, 2015

Regulations: Twenty-fifth transitional provision Law IRPF

Income from movable capital, with a generation period of more than two years, which was received in installments prior to 1 January 2015, with the right to apply the reduction in article 26.2 of the Personal Income Tax Law as worded as of 31 December 2014, may continue to apply the reduction for irregularities provided for in the aforementioned article, with the current reduction of 30% and the limit of the maximum reduction base of 300,000 euros, to each of the installments imputed as of 1 January 2015, provided that the quotient resulting from dividing the number of years of generation, computed from date to date, by the number of tax periods of installment payment, is greater than two.

However, in the case of income derived from commitments acquired prior to 1 January 2015, which were scheduled to begin being collected in installments in tax periods beginning on or after that date, the substitution of the initially agreed method of collection for collection in a single tax period will not alter the start of the period for generating the income.

Remember: the returns obtained from the transfer to third parties of own capital that comes from entities related to the taxpayer in the terms established in article 18 of the LIS that correspond to the excess of the amount of own capital transferred to the related entity with respect to the result of multiplying by three the equity, in the part that corresponds to the taxpayer's participation, of the latter, form part of the general tax base.