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Practical guide to 2020 Income Tax.

Reduction in net yield due to the start of an economic activity

Regulations: Article 32,3 Personal Income Tax Act


The taxpayer who meets all of the following requirements is entitled to this reduction:

  1. Start the exercise of an economic activity and determine the return on its economic activity in accordance with the direct estimation method.

    To comply with this requirement, all economic activities carried out by the taxpayer must be taken into account, both those carried out individually and those carried out through entities in the income allocation system.

  2. The economic activity has started from 1 January 2013.

  3. That no other activity has been carried out in the year prior to the start date of the new activity.

    For these purposes, an economic activity will be understood to be initiated when no economic activity has been carried out in the year prior to the date of beginning of the same, without taking into account those activities in which the financial year had ceased without obtaining positive net returns from the outset.

Amount of the reduction

  • Once the above requirements have been met, the taxpayer may reduce 20 per cent of the net positive return declared for all of their activities, 100 previously reduced, if applicable, by applying the reduction for net returns with a generation period of more than two years, or obtained in a particularly irregular manner over time, and due to the reduction corresponding to the exercise of certain economic activities referred to in article 32,2 of the Personal Income Tax Act.
  • The reduction will be applied in the first tax period in which the return is positive and in the following.
  • In cases where an activity that generates the right to apply this reduction is initiated and another one is subsequently initiated, without having ceased the above reduction will be applied in the tax period in which the sum of the positive net returns of both activities is positive, applying on this sum.

Maximum reduction limit

The amount of the net returns on which the aforementioned reduction will be applied cannot exceed the amount of 100,000 euros per year.


The reduction does not apply in the tax period in which more than 50% of the taxpayer's income comes from a person or entity from which the taxpayer has obtained earned income in the year prior to the start date of the activity. 100