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Practical manual for Income Tax 2024. Volume 1

Performance of economic activities

Directly estimated economic activities

Determination of net income

  • Full computable income

    Due to the consequences of the DANA (National Anti-Drug Defect), the following aid programs for business owners are approved, which will be considered current subsidies:

    1. The direct aid for the destruction or repair of heritage elements referred to in article 11 of Royal Decree-Law 6/2024 , exempt by virtue of section 1 c) of the Fifth Additional Provision of the Personal Income Tax Law , and

    2. An extraordinary and temporary aid, complementary to that 11 of Royal Decree-Law 6/2024 referred to in the previous point, to compensate for the loss of income in agricultural holdings that have suffered damage as a result of the DANA, in the municipalities included both in the annex to Royal Decree-Law 6/2024, of November 5, and in the annex to Royal Decree-Law 7/2024, of November , regulated by article of the latter. These grants will not be included in the personal income tax base pursuant to the Fifth Additional Provision of the Personal Income Tax Law, pursuant to the Sixteenth Additional Provision of Royal Decree-Law 8/2024, of November 28. 

  • Deductible expenses

    a) Expenses of the holder of the activity in social security and for contributions to alternative mutual funds to Social Security

    Pending approval of the General State Budget Law for 2024, the maximum contribution for common contingencies, which operates as a limit on deductible expenses for alternative mutual funds to the special Social Security regime for self-employed workers (RETA), remains at €15,266.72. [0.283 x (4,495.50 x 12)].

    b) Expenses that are difficult to justify in simplified direct estimation during the 2024 tax period

    In the 2024 tax period, the 5% rate (7% in 2023) on net income for all deductible provisions and expenses that are difficult to justify, as referred to in Article 30 of the Personal Tax Regulations, will again apply.

  • Repayments

    a) Amortization of certain vehicles and new infrastructure.

    With effect from 1 January 2024, Royal Decree-Law 4/2024, of 26 June (BOE of 27 June), added Additional Provision Fifty-ninth to the Personal Income Tax Law and amended Additional Provision Eighteenth of the LIS, replacing the existing accelerated depreciation system, consisting of applying double the maximum linear depreciation coefficient according to officially approved tables, with a free depreciation system, provided that the investments are new and come into operation in the tax periods beginning in 2024 and 2025, and the remaining required requirements are met.

    Thus, electric vehicles and charging infrastructure that come into operation in 2024 and 2025 can be freely depreciated, provided that in the first case the taxpayer has not died before June 28, 2024. Otherwise, the accelerated amortization system will apply.

    b) Freedom of amortization on investments that use energy from renewable sources.

    Article 18 of Royal Decree-Law 8/2023, of December 27, amended the Seventeenth Additional Provision of Law 27/2014, on Corporate Income Tax, to extend this tax incentive for one more year (until 2024). Thus, investments in facilities intended for the following purposes can be freely amortized in the 2024 tax period: 

    • Self-consumption of electrical energy using energy from renewable sources as defined in Royal Decree 244/2019, of April 5.

    • Thermal use for own consumption that uses energy from renewable sources, replacing installations that use energy from non-renewable fossil sources.

    This tax incentive, initially intended for investments made in 2023, will only apply to investments that come into operation in the 2023 and 2024 fiscal years.

Determination of Total Reduced Net Return

Objectively estimated economic activities

  1. Resignation and consequences of resignation:

    For the 2024 fiscal year, a new deadline has been established to waive or revoke the waiver of the objective estimation method, which runs from December 29, 2023, to January 31, 2024. However, resignations or revocations submitted for the year 2023, during the month of December 2023, prior to the start of the previously indicated period, were deemed to have been submitted within the applicable period. However, taxpayers may modify the option exercised during the month of December, if applicable, between December 29, 2023, and January 31, 2024.

    Exclusively for taxpayers who carry out economic activities in the municipal areas affected by the DANA and mentioned in Annex of Royal Decree-Law 6/2024, of November 5, who consider that the objective estimation method will not adequately reflect their tax situation, a new extraordinary period for waiving said method is established, so that they can determine in the 2024 fiscal year the net income of their economic activity in accordance with the direct estimation method without the need to comply with the formal obligations provided for in said method. Specifically, it establishes the possibility of waiving its application in said 2024 tax period during the month of December of said year or by submitting within the regulatory period the declaration corresponding to the fractional payment of the fourth quarter of 2024 in the manner provided for the direct estimation method (therefore submitting form 130 instead of 131), provided that they have not ceased to exercise their activity prior to October 29, 2024.

    For these taxpayers, the mandatory three-year link established by law for waiving the objective estimation method of personal income tax is eliminated, so that those who renounce the application of the objective estimation method for the 2024 financial year within the extraordinary period indicated above may again determine the net income of their economic activity according to the objective estimation method in 2025 or 2026, provided that they meet the requirements for its application and revoke the waiver of the objective estimation method within the period provided for in letter a) of section 1 of article 33 of the Personal Income Tax Regulations or by submitting on time the declaration corresponding to the fractional payment of the first quarter of the financial year 2025 or 2026, as appropriate, in the manner provided for the objective estimation method. 

  2. Exclusionary limits:

    • Article 15 of Royal Decree-Law 8/2023, of December 27, which adopts measures to address the economic and social consequences arising from the conflicts in Ukraine and the Middle East as well as to alleviate the effects of the drought ( BOE of December 28), has modified, with effect from January 1, 2024, the thirty-second transitional provision of the Personal Income Tax Law , to extend to the 2024 tax period the application of the same exclusive quantitative limits set for the years 2016 to 2023: both those relating to the volume of gross income in the immediately preceding year derived from the exercise of economic activities (250,000 euros for all economic activities, except for agricultural, livestock and forestry activities and 125,000 euros for operations for which there is an obligation to issue an invoice when the recipient is a businessman) and to the volume of purchases of goods and services (250,000 euros, excluding the acquisition of fixed assets, for all activities in objective estimation - also including agricultural, livestock and forestry activities).

    • For agricultural, livestock and forestry activities, the exclusionary limit provided for in article of the Personal Income Tax Law applies to the volume of gross income in the immediately preceding year (250,000 euros per year, for all agricultural, livestock and forestry activities carried out by the taxpayer) and, for the volume of purchases of goods and services, the amount of 250,000 euros, excluding the acquisition of fixed assets, for all activities in objective estimation, provided for in the thirty-second transitional provision in the Personal Income Tax Law and whose application is extended to the 2024 financial year.

  3. Determination of prior net performance:

    Order HFP /1359/2023, of December 19, which develops the objective estimation method in the Personal Income Tax for the year 2024, maintains, in general, for the year 2024 the amount of the signs, indexes or modules applicable in 2023 to the following products derived from agricultural activities: 

    • table grapes: at 0.32

    • flowers and ornamental plants: at 0.32, and

    • tobacco: at 0.26

     Likewise, for the 2024 financial year, the treatment of direct aid decoupled from the Common Agricultural Policy, which was revised in the 2023 Module Order, is also applicable, such that their taxation in proportion to the income from their crops or farms is conditional on obtaining a minimum income from the activity other than that of the direct aid itself.

    Finally, it should be noted that due to the consequences of the DANA (National Anti-Dumping Act), the following aid for business owners has been approved, which will be considered current subsidies:

    -The direct aid for the destruction or repair of heritage elements referred to in article 11 of Royal Decree-Law 6/2024 , exempt by virtue of section 1 c) of the Fifth Additional Provision of the Personal Income Tax Law with certain qualifications, and

    -An extraordinary and temporary aid, of a complementary nature to that of article 11 of Royal Decree-Law 6/2024 referred to in the previous point, to compensate for the loss of income in agricultural holdings that have suffered damage as a result of the DANA, in the municipalities included both in the annex of Royal Decree-Law 6/2024, of November 5, and in the annex of Royal Decree-Law 7/2024, of November 11, regulated by article 24 of the latter, which, unlike the previous one, is subject to tax and not exempt, and is granted under the " EU de minimis aid" system. This aid is considered exempt by the Fifth Additional Provision of the Personal Income Tax Law, pursuant to the Sixteenth Additional Provision of Royal Decree-Law 8/2024, of November 28.

  4. Determination of reduced net income:

    As in 2022 and 2023, for agricultural and livestock activities, the following reductions may be applied to the previous net income, before the amortization of tangible and intangible fixed assets:

    • 35% reduction in the purchase price of agricultural diesel.

    • 15% reduction in the purchase price of fertilizers.

    In both cases, the acquisitions must be necessary for the development of said activities.

    Freedom of amortization on certain vehicles and new charging infrastructures

    A new Additional Provision fifty-ninth is introduced to the Personal Income Tax Law , so that, with effect from 1 January 2024, taxpayers of Personal Income Tax who carry out their economic activity using the objective estimation method may also apply the freedom of depreciation for certain vehicles and new charging infrastructure provided for in the Eighteenth Additional Provision of Law 27/2014, of 27 November, on Corporate Income Tax.

  5. Determination of net module yield:

    As a result of the significant impact of the drought and rising prices, the following corrective indices will be applied to the reduced net yield for 2024, which were already modified for 2023:

    • The correction index for feed purchased from third parties is set at 0.50 per 100, and

    • The rate for crops grown on irrigated land using electricity for this purpose is set at 0.75% of the yield from crops grown on irrigated land using electricity.

  6. Determination of the net income of the activity: applicable reductions:

    • General reduction: The general reduction applicable to the net income from modules obtained in the 2024 tax period by taxpayers in objective estimation, both with agricultural, livestock and forestry activities and with activities other than these, is reduced from 10 to 5 percent.

    • DANA Reduction: As a result of the damage caused by the DANA, the application of a 25% reduction in the net income of modules to economic activities carried out in the municipal areas mentioned in the annex to Royal Decree-Law 6/2024, of November 5, has been approved for the 2024 financial year.

      This reduction applies to both agricultural, livestock, and forestry activities, as well as to non-agricultural activities.

    • Lorca reduction: The 20% reduction in net income for economic activities carried out in the municipal area of Lorca (Murcia) is maintained, applicable only to determine net income in activities other than agricultural, livestock and forestry. 

    • Reduction of La Palma Island: The 20% reduction in net income for taxpayers who carry out economic activities on the island of La Palma is maintained in 2024.

      This reduction, unlike that of Lorca, applies to all economic activities that determine net income in the objective estimation method, including agricultural, livestock and forestry activities.