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Practical manual for Income Tax 2020.

3.1 Exclusive quantitative limits

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

A. Having reached in the previous year (2019) a volume of income greater than 250,000 euros per year , for all of its agricultural, livestock and forestry activities carried out by the taxpayer

Regulations: Art. 32.2 a) Regulation Personal Income Tax . See also article 3.1 b) of Order HAC /1164/2019, of November 22 ( BOE of the 30th)

When the activity had been started in the immediately preceding year, the volume of income will increase to the year.

To determine these limits, the following operations will be computed:

  • Those that must be recorded in the sales or income record book provided for in article 68.7 of the Personal Income Tax Regulations.
  • Those that must be recorded in the record book provided for in article 40.1 (record book of invoices received) of the VAT Regulation , approved by Royal Decree 1624/1992, of December 29 ( BOE of 31).

  • B. Having exceeded in the previous year (2019) the volume of purchases in goods and services for the set of economic activities developed by the taxpayer the amount of 250,000.00 euros per year, excluding the acquisitions of fixed assets

    Regulations: Thirty-second transitional provision of the Personal Income Tax Law and art. 32.2 b) Personal Income Tax Regulations

    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.

    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 and indefinite validity, modifies the thirty-second transitional provision of the Personal Income Tax Law , to extend to the tax period 2020 the application of the magnitude of 250,000 euros of purchase volume in goods and services set for the years 2016, 2017, 2018 and 2019.

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 the 11th).