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Practical Income Manual 2021.

Transfer of assets from personal assets to business or professional assets: affectation

Regulations: Articles 28.3 Law Personal Income Tax and 23 Regulations

Business or professional assets are made up of all those assets or rights integrated into the organizational scope of an economic activity carried out by its owner.

For its part, private assets include the rest of the assets or rights whose ownership also corresponds to the taxpayer, but which are not affected by the development of any economic activity.

The principles and rules that govern the impact of goods or rights are the following:

a. The incorporation of an asset into economic activity from the personal assets of the taxpayer who owns it does not produce an asset alteration for tax purposes as long as the asset continues to form part of his assets.

b. The equity element is incorporated into the taxpayer's accounting for the acquisition value that it had at the time of the impact .

This value is made up of:

  • When the acquisition of the asset element had occurred for consideration for the sum of the real amount for which the acquisition was made, the cost of the investments and improvements made in the asset element and the expenses and taxes inherent to the acquisition, excluding interest, paid by the acquirer. Said value will be reduced by the amount of tax-deductible amortization, calculating in any case the minimum amortization, regardless of its effective consideration as an expense.

  • When the acquisition of the asset element had occurred for profit by the owner of the activity, the previous rules will apply, although the actual amount of the acquisition will be taken as the acquisition value at effects of the Inheritance and Donation Tax, without exceeding the market value.

Note: The components of acquisition value are discussed in greater detail in Chapter 11 of this Manual.

c. It will be understood that there has been no impact if the asset is disposed of before 3 years have elapsed since.