Spain Tax Advisory: The GTD pronounces about the income imputations before the COVID-19

The Consultation establishes what happens with income imputations derived from second residences that have not been able to be rented during lockdown

On May 19th, 2020 the General Taxation Directorate (GTD) issued its Binding Resolution V1474-20 on the allocation of real estate income during the lockdown. In this case, the situation of an income derived from a second home that could not be rented during the state of alarm in Spain is analyzed.

For this purpose, the following background will be considered:

  • The consultant is the owner of a second home in which she does not reside.
  • This residence was not rented during the quarantine, nor is it affected to an economic activity.

For its part, the GTD relies on the following arguments to establish its ruling:

  • Firstly, it points out that Article 85 of the Personal Income Tax Law (PITL) is intended to subject to taxation an economic capacity evidenced by the ownership of a property or a right in rem thereon but excluding the habitual residence.
  • He explains that, the consultation V1385-18 refers to the situation analyzed as a basis for a possible exclusion.
  • However, it indicates that this consultation referred to an empty property that is illegally occupied by third parties against the will of the owner, having initiated an eviction procedure by the owner of the property.
  • Therefore, in the above-mentioned consultation, it is concluded that there is no imputation of income due to its characteristics in relation to the legally established exclusion case, consisting in the fact that the property generates capital returns.

In conclusion, the GTD states that "the imputation of real estate income should proceed, since the fact of the state of alarm is not foreseen in the list of assessed cases in which the imputation of real estate income does not proceed".

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Tags: tax advisor madrid, COVID-19, Income Tax, Income Imputation, Binding Consultation, Spain Tax Advisory