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Practical Income Manual 2021.

Scope of application of the simplified modality

Regulations: Art. 28 Regulation Personal Income Tax


The simplified modality of the direct estimation method is voluntary in nature , so the taxpayer can waive its application . In the absence of waiver, this modality must be applied in fiscal year 2021 to determine the net income of all economic activities carried out by the taxpayer, provided that:

a. Do not determine the net return of all your activities by the objective estimation method .

For these purposes, it should be noted that the economic activities eligible for the objective estimation method and the requirements for their inclusion can be consulted in Chapters 8 and 9 .

b. The net amount of the turnover of the previous year , corresponding to all the activities carried out by the taxpayer, does not exceed 600,000 euros per year .

When the activity had started in the immediately preceding year, the net amount of the turnover will be increased per year, for these purposes only.

When no activity was carried out in the immediately preceding year, the performance will be determined by this modality, unless it is waived in the terms discussed below.

c. No activity carried out by the taxpayer is in the normal modality of the direct estimation method.

Note: With the exception of the activities included in the objective estimation method, in the first year of carrying out the activity, the net return will be determined by this method, unless expressly waived, whether whatever the net amount of the resulting turnover at the end of the year.

Determination of the net amount of the turnover

The net amount of the turnover is made up of the difference between the following positive and negative items:

Positive items

  • The amount of the sale of products and the provision of services or other income derived from the ordinary activity of the company, understood as the activity that the company carries out regularly and from which it obtains its periodic income.

    Keep in mind that on certain occasions, in business reality, several activities are carried out simultaneously, which could be called multiactivity. In this case, in relation to the determination of the "net amount of the turnover", it must be understood that the income produced by the different activities of the company will be considered in the calculation of ordinary activities, to the extent that they are obtained on a regular and periodic basis and are derived from the economic cycle of production, marketing or provision of services of the company, that is, from the circulation of goods and services that are the object of its traffic.

    In no case are the products for sale consumed by the company itself, nor the work carried out for itself, included in the amount of the annual turnover.

  • The acquisition price or production cost of goods or services delivered in exchange for non-monetary assets or in consideration for services that represent expenses for the company.

    They do not form part and, therefore, are excluded from this heading, exchanges of homogeneous elements , such as exchanges of fungible raw materials between two companies or exchanges of finished products, or exchangeable goods. between two marketers.

  • The amount of subsidies granted to the company individually based on and forming part of the price of the units of product sold or the level of services provided.

    Neither the amount of the remaining subsidies nor the financial income is included.

    Therefore, "subsidies" in general are not included to determine the net amount of the turnover, being admitted only for exceptional cases that occur within the framework of some specific activities, in which the subsidy is granted on an individual basis, based on units of product sold or services provided.

Negative items

In all cases, the following items will be deducted from the amount obtained in accordance with the provisions of the previous section:

  • The amounts of sales returns.

  • The "rebates" on sales or provision of services.

  • Commercial discounts made on income computed in the annual turnover.
  •  Discounts for prompt payment granted outside of invoice.

  • VAT and special taxes (which are levied on the manufacture or import of certain goods), if they have been computed within the amount of sales or the provision of services and must be passed on .

See article 35.2 of the Commercial Code; the Standard for preparing the annual accounts 11 of the General Accounting Plan, approved by Royal Decree 1514/2007, of November 16 ( BOE of 20), as well as article 34 of the Resolution of February 10, 2021 (BOE of 13), of the Institute of Accounting and Audit of Accounts (ICAC).