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Practical manual for Income Tax 2020.

3.1 Exclusive quantitative limits

Note: Royal Decree-Law 18/2019, of December 27, by which certain measures are adopted in tax, cadastral and social security matters ( BOE of the 28th), with effect from January 1, 2020, modifies the thirty-second transitional provision of the Personal Income Tax Law , to extend to the tax period 2020 the application of the same exclusive quantitative limits set for the years 2016, 2017, 2028 and 2019.

Therefore, although article 3.1 of Order HAC /1164/2019, of November 22, by which the objective estimation method of IRPF is developed for the year 2020, modified the exclusion magnitudes for the year 2020 by establishing them by reference to those contained in article 31 of the Personal Income Tax Law, those in force in the years 2016, 2017, 2018 and 2019 will remain in force for the year 2020.

The following quantitative limits constitute causes for exclusion from the objective estimation method:

A. Having achieved in the previous year (2019), a volume of gross income derived from the exercise of economic activities that exceeds the following amounts:

Regulations: Thirty-second transitional provision Law IRPF and art. 32.2 a) Regulation

  • 250,000 euros per year , considering all those developed by the taxpayer, except agricultural, livestock and forestry

    For these purposes, all transactions will be taken into account regardless of whether or not there is an obligation to issue an invoice in accordance with the provisions of the Regulation governing invoicing obligations, approved by Royal Decree 1619/2012 of 30 November.

    For this calculation, the volume of income from agricultural, livestock and forestry activities is not taken into account.

  • 125,000 euros per year , when it corresponds to operations for which they are obliged to issue an invoice as the recipient is a businessman or professional acting as such in accordance with the provisions of article 2.2.a) of the Regulation governing invoicing obligations.

    When an activity was started in the immediately preceding year, the volume of income will be increased to the year.

    In no case will current or capital subsidies or compensation be computed, nor will the Value Added Tax and, where applicable, the equivalence surcharge levied on the operation, for those activities that are taxed under the simplified regime of the Value Added Tax.

B. Having exceeded in the previous year (2019) the volume of purchases in goods and services the amount of 250,000 euros per year , excluding acquisitions of fixed assets. 

Regulations: Art. 32.2 b) Regulation Personal Income Tax .

Attention: To determine this limit, the volume of purchases from agricultural, livestock and forestry activities is also taken into account.

In the case of subcontracted works or services, the amount thereof will be taken into account for the calculation of this limit.

When an activity had been started in the immediately preceding year, the volume of purchases will increase yearly.

Rules for determining the volume of gross returns and purchases

In order to determine the volume of gross income and the volume of purchases of goods and services mentioned above, not only the operations corresponding to the economic activities carried out by the taxpayer must be taken into account, but also those corresponding to those carried out by the spouse, descendants and ascendants, as well as by entities under the income attribution regime in which any of the above participate, in which the following circumstances occur:

  • That economic activities are identical or similar.

    For these purposes, economic activities classified in the same group in the Tax on Economic Activities will be deemed to be identical or similar.

  • That there exists a common direction for such activities, sharing personal or material resources.

    In the case of transactions carried out with related entities, under the terms set forth in article 18 of Law 27/2014, of November 27, on Corporate Tax ( BOE of the 28th), they must be valued imperatively at their normal market value, understood as the one that would have been agreed upon by independent persons or entities under conditions of free competition.

    In these cases, the taxpayer must comply with the documentation obligations of said operations under the terms and conditions established in articles 13 to 16, Chapter V ("Information and documentation on related entities and operations") of Title I of the Corporate Tax Regulations, approved by Royal Decree 634/2015, of July 10 ( BOE of 11).