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Practical manual for Income Tax 2022.

Performance of economic activities

Objectively estimated economic activities

1. Resignation and consequences of resignation

  • Resignation: Exceptionally, for the 2022 financial year, it has been permitted to exercise the waiver or revocation of the waiver of the application of the objective estimation method until January 30, 2022. However, the resignations or revocations submitted for the year 2022, during the month of December 2021, were understood to have been submitted during the valid period.

  • Consequences of resignation: Taxpayers who waived the application of the objective estimation method in fiscal year 2021, in accordance with the provisions of article 10 of Royal Decree-Law 35/2020, of December 22, have been able to determine their net income in accordance with said method in fiscal year 2022 again, without being subject to the minimum three-year period of mandatory linkage to the direct estimation method.

To do so, taxpayers must have revoked the previous waiver, either expressly during the month of January 2022, or tacitly by submitting on time the declaration corresponding to the fractional payment of the first quarter of the 2022 fiscal year in the manner provided for the objective estimation method (i.e., by submitting form 131).

2. Exclusive limits :

  • Article 60 of Law 22/2021, of December 28, on the General State Budget for the year 2022 ( BOE of December 29) has modified, with effect from January 1, 2022 and indefinite validity, the thirty-second transitional provision of the Personal Income Tax Law, to extend to the tax period 2022 the application of the same exclusive quantitative limits set for the years 2016 to 2021: 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 for agricultural, livestock and forestry activities and 125,000 euros for operations for which there is an obligation to issue an invoice when the recipient is a businessman) and to the volume of purchases of goods and services (250,000 euros, excluding the acquisition of fixed assets, for all activities in objective estimation - also including agricultural, livestock and forestry activities).

  • For agricultural, livestock and forestry activities, the exclusion limit provided for in article 31 of the Personal Income Tax Law applies for the volume of gross 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 in goods and services, the amount of 250,000 euros, excluding acquisitions of fixed assets, for all activities in objective estimation, provided for in the thirty-second transitional provision in the Personal Income Tax Law and whose application is extended to the year 2022.

3. Determination of prior net performance :

Order HFP /1335/2021, of December 1 ( BOE of December 2) maintains for the year 2022 the amount of the signs, indices or modules of the previous year.

However, Order HFP /1172/2022, of November 29 ( BOE of December 1), which develops for the year 2023 the objective estimation method of the Personal Income Tax and the simplified special regime of the Value Added Tax introduces several exceptional measures that are specified below.

4. Determination of reduced net income

For agricultural and livestock activities, in order to offset the increase in the cost of certain inputs, the possibility of applying the following reductions to the previous net income, before the amortization of tangible and intangible fixed assets, is established:

  • 35% reduction in the purchase price of agricultural diesel.

  • 15% reduction in the purchase price of fertilizers.

In both cases, the acquisitions must be necessary for the development of said activities, must have been made in the year 2022 and must be documented in invoices issued in said period that meet the requirements set forth in Royal Decree 1619/2012, of November 30, which approves the Regulation governing billing obligations.

5. Determining the net yield of modules

The correction rate for feed purchased from third parties is set at 0.50 percent and the rate for crops on irrigated land that use electric power for this purpose is set at 0.75 percent of the yield from crops grown on irrigated land using electric power.

For the application of this index, the requirement that the average daily electricity consumption, in terms of energy billed in kWh, of the bill for the month of the tax period with the highest consumption be at least 2.5 times higher than that corresponding to two months of the same tax period is also eliminated.

6.Determination of the net income of the activity: applicable reductions

  • General reduction: The general reduction applicable to the net income from modules obtained in the 2022 tax period by taxpayers in objective estimation with activities other than agricultural, livestock and forestry is raised from 5 to 15 percent.

    In the case of agricultural, livestock and forestry activities, article 2 of Order HFP /405/2023, of April 18 ( BOE of April 25), has again raised this general reduction percentage for the 2022 tax period, going from 15 to 25 percent.

  • Lorca reduction: The 20% reduction in net income for economic activities carried out in the municipal area of Lorca (Murcia) is maintained, applicable only to determine net income in activities other than agricultural, livestock and forestry. 

  • Reduction of La Palma Island: A 20% reduction in net income is established that may be applied by taxpayers who carry out economic activities on the island of La Palma.

    This reduction, unlike that of Lorca, applies to all economic activities that determine net income in the objective estimation method, including agricultural, livestock and forestry activities.