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Practical manual for Income Tax 2021.

Phase 5: Determination of the reduced net return on the activity

Regulations: Articles 32.1 Law IRPF and 25 Regulation

In the event that, in the course of agricultural activity, income has been obtained whose generation period has been greater than two years or other income classified by regulations as having been obtained in a notoriously irregular manner over time, when they are imputed in a single tax period, a reduction of the net income of 30% of said amounts may be applied. The result thus obtained is the reduced net return of the activity.

For the purposes of applying the aforementioned 30% reduction, the following are considered to be income obtained in a notoriously irregular manner over time, exclusively when they are attributed to a single tax period:

  • Capital grants for the acquisition of non-depreciable fixed assets.

  • Compensation and aid for cessation of economic activities.

  • Compensation received in lieu of economic rights of indefinite duration.

The amount of net income referred to in this section to which the aforementioned reduction will be applied may not exceed the amount of 300,000 euros per year .

In the event that several irregular returns of the same nature are obtained, and their amount exceeds the limit of 300,000 euros of maximum amount on which to apply the 30% reduction, the maximum reduction will be distributed proportionally between all the returns of that nature.

Remember: Capital gains or losses arising from the sale or transfer of items related to economic activity are not included in the income derived from it, but are taxed with the rest of the capital gains and losses.