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Practical manual for Income Tax 2021.

4. Other business insights

Regulations: See common rule 3 of Annex III of Order HAC/ 1155/2020, of November 25 ( BOE of December 4).

The net return on modules must be increased by the amount corresponding to other business receipts such as current and capital subsidies.

The criteria for temporary allocation of current and capital grants are discussed in Chapter of this Manual.

Benefits received from Social Security for temporary disability, risk during pregnancy or provisional disability, where applicable, are taxed as employment income.

Covid 19 : The benefits for cessation of activity due to the health emergency caused by Covid-19 that we list below are considered work income and not income from economic activity:

  • Extraordinary cessation of activity benefit for self-employed workers affected by a temporary suspension of all activity as a result of a resolution by the competent authority as a measure to contain the spread of the COVID-19 virus.
  • Extraordinary cessation of activity benefit for those self-employed workers who cannot be entitled to the ordinary cessation of activity benefit provided for in article 7 of Royal Decree-Law 2/2021, of January 26, on the reinforcement and consolidation of social measures in defense of employment (BOE of the 27th) or to the cessation of activity benefit regulated in articles 327 and following of the consolidated text of the General Social Security Law, approved by Royal Legislative Decree 8/2015, of October 30.
  • Extraordinary cessation of activity benefit for seasonal workers.
  • Benefit for cessation of activity compatible with self-employment regulated in article 7 of Royal Decree-Law 2/2021, of January 26, on the reinforcement and consolidation of social measures in defense of employment ( BOE of the 27th).

The reason is that the nature of these benefits is considered analogous to the economic benefit for total, temporary or definitive cessation of activity regulated by Law 32/2010, of August 5, which establishes a specific system of protection for cessation of activity of self-employed workers ( BOE of 6). 

Unlike the previous ones, the aid or subsidies granted by the Autonomous Communities with the aim of promoting the maintenance of the economic activity of the self-employed in the face of the effects of the measures adopted to deal with the COVID -19 epidemic, as they do not fit into other concepts of the IRPF and their purpose is to compensate for the decrease in income obtained in the economic activity, are classified as income from economic activities (current subsidies) and must be imputed to the year in which they are granted, unless the criterion of collections and payments has been chosen for the temporary imputation of the income from the activity.