Phase 4: Determining the net return on the activity

In accordance with the regulations governing the objective estimation method, contained in Annex I and in the first Additional Provision of Order HFP /1335/2021, of December 1 ( BOE of December 2), the following reductions may be made to determine the net income of the activity:

1. General reduction: 25 percent

Regulations: Additional Provision Eight Order HFP /1172/2022, of November 29 ( BOE of December 1), Additional Provision First Order HFP /1335/2021, of December 1 ( BOE of December 2) and article 2 of Order HFP /405/2023, of April 18 ( BOE of April 25).

By 2022, the net yield of modules from agricultural, livestock and forestry activities, as well as from transformation processes, determined in accordance with the above phase 3, may be reduced by the percentage of 25 percent .

Note: Article 2 of Order HFP /405/2023, of April 18, by which the net income indices and the general reduction applicable in the objective estimation method of the Personal Income Tax for agricultural and livestock activities affected by various exceptional circumstances are reduced for the 2022 tax period ( BOE of April 25), has raised from 15 to 25 percent the reduction provided for in the First Additional Provision of Order HFP /1335/2021, which was previously increased from 5 to 15 percent Eighth Additional Provision of Order HFP / 172/2022, of November 29, by which the objective estimation method of personal income tax is developed for the year 2023.

2. Reduction of young farmers: 25 percent

Regulations: Additional Provision Sixth Law IRPF and instruction 3 of Annex I Order HFP /1335/2021, of December 1 ( BOE of December 2)

Young farmers (over 18 and under 40) or agricultural wage earners may reduce the net module yield resulting from applying the general reduction by 25% in each of the tax periods closed during the five years following their first installation as owners of a farm with priority status, carried out under the provisions of Chapter IV of Title I of Law 19/1995, of July 4, on the Modernization of Agricultural Holdings, provided that they prove the implementation of a plan to improve the farm.

For these purposes, the priority farm status must be accredited by a certificate issued by the corresponding body of the Autonomous Community, or by inclusion in the General Catalogue of Priority Farms of the Ministry of Agriculture, Fisheries and Food.

See Royal Decree 613/2001, of June 8, on the improvement and modernization of the production structures of agricultural holdings ( BOE of the 9th).

3. Reduction for economic activities carried out on the island of La Palma: 20 per 100

4. Extraordinary expenses due to exceptional circumstances

Regulations: See common rule 2 of Annex III Order HFP /1335/2021, of December 1 ( BOE of December 2)

When the development of the activity has been affected by fires, floods, subsidence or other exceptional circumstances that have determined extraordinary expenses outside the normal process of carrying out the activity, the interested parties may reduce the resulting net income by the amount of said expenses. To do so, taxpayers must have informed the Administration or, failing that, the Tax Agency Delegation, of this circumstance within 30 days from the date on which it occurs, providing the corresponding justification for this purpose and mentioning, where appropriate, the compensation to be received due to such alterations, so that the Tax Administration can verify the certainty of the cause that motivates the reduction in income and the amount thereof.

See in this regard Royal Decree-Laws 10/2021, of May 18, adopting urgent measures to alleviate the damage caused by the storm "Filomena" (BOE of May 19) and 20/2021, of October 5, adopting urgent support measures for the repair of the damage caused by volcanic eruptions and for the economic and social reconstruction of the island of La Palma ( BOE of October 6). Also, see Royal Decree-Law 28/2021, of December 17, which adopts urgent complementary measures for the repair of damage caused by volcanic eruptions and for the economic and social recovery of the island of La Palma (BOE of December 18).