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Renta 2021 Practical Handbook

Performance of economic activities

A. Directly estimated economic activities

Tax-deductible expenses

Impairment losses on receivables arising from possible insolvencies of debtors under Article 13.1 of the LIS.

In accordance with Article 14 of Royal Decree-Law 35/2020, of 22 December, on urgent measures to support the tourism, hotel and catering and commerce sector and in tax matters (BOE of 23 December), taxpayers of IRPF who are considered small companies as they meet the conditions of Article 101 of LIS, may deduct, in 2020 and 2021, losses due to impairment of credits derived from possible insolvencies of debtors when at the time of accrual of the tax the period that has elapsed since the expiry of the obligation referred to in Article 13.1.a) of LIS is three months.

B. Economic activities in objective estimation

As a consequence of the health crisis caused by Covid-19, and with the aim of adjusting the amount of net income determined under the objective assessment method to the reality of the economic activity caused by this situation, the following measures have been adopted for this financial year 2021:

1.Resignation and consequences of resignation

Article 10 of Royal Decree-Law 35/2020, of 22 December, on urgent measures to support the tourism, hotel and catering and commerce sector and in tax matters (BOE of 23 December), eliminated the obligatory link to the direct assessment method for three years, established in articles 30.1 of the Law of IRPF and 29 of its Regulations, when the taxpayer who carries out economic activities renounces the objective assessment method of IRPF.Specifically, the waiver of the application of the objective assessment method for the financial year 2021 does not prevent the taxpayer from returning to determine the income from the economic activity in 2022 in accordance with that method, provided that the requirements for its application are met, when the taxpayer revokes the previous waiver.

To this end, taxpayers were given the possibility of waiving the application of the objective assessment method for the financial year 2021 by submitting the instalment payment under the direct assessment method (thus filing form 130 instead of form 131).In this case, they will be taxed in 2021 under the direct assessment method.

In addition, for personal income taxpayers who carry out economic activities in accordance with the objective assessment method and renounce the application of the same for the financial year 2021, either by express or tacit renunciation, the possibility is established of returning to determine the net yield of their economic activity in accordance with the objective assessment method in the financial year 2022, without being subject to the 3-year period.

2.Exclusive limits:

  • Article 63 of Law 11/2020, of 30 December, on the General State Budget for the year 2021 (BOE of 31 December), modified the thirty-second transitory provision of the Law of IRPF extending for the tax period 2021 the application of the same quantitative limits excluding the objective assessment method set for the years 2016 to 2020:both those relating to the volume of gross income in the immediately preceding year derived from the exercise of economic activities (250,000 euros for all economic activities, except agricultural, livestock and forestry activities and 125,000 euros for operations where there is an obligation to issue an invoice when the recipient is an entrepreneur) and the volume of purchases of goods and services (250,000 euros, excluding purchases of fixed assets, for all activities in objective assessment - also including agricultural, livestock and forestry activities).

  • For agricultural, livestock and forestry activities, the exclusion limit provided for in article 31 of the Law of IRPF is applied for the volume of income in the immediately preceding year (250,000 euros per year, for all agricultural, livestock and forestry activities carried out by the taxpayer) and, for the volume of purchases of goods and services, the amount of 250,000 euros, excluding acquisitions of fixed assets, for all activities in objective assessment, provided for in the thirty-second transitory provision of the Law of IRPF and whose application is extended to the financial year 2021.

3.Determination of the preliminary net yield:

The Order HAC/1155/2020, of 25 November (BOE of 4 December), maintains for the financial year 2021 the amount of the signs, indices or modules of the previous financial year.

4.Determination of the net yield of the activity:applicable reductions

  • General reduction:the general reduction is 20 per cent for agricultural, livestock and forestry activities and 5 per cent of net income for other economic activities.

    The increase for 2021 from 5% to 20% of the reduction provided for in the first additional provision of Order HAC/1155/2020 of 25 November, which provides for the development for 2021 of the agricultural, livestock and forestry activities included in Annex I of the aforementioned Order, was implemented by Article 4 of Royal Decree-Law 4/2022 of 15 March, which adopts urgent measures to support the agricultural sector due to drought (BOE of 16 March).

  • Reduction Lorca:the reduction of 20% of the net income for economic activities carried out in the municipality of Lorca (Murcia) is maintained.