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Practical manual for Income Tax 2024. Part 1

Special rules applicable to certain subsidies or aid

Without prejudice to the peculiarities that may arise from the regulatory regulations or the specific conditions of each of them, it is worth mentioning the treatment applicable, in general, to the following subsidies or aid:

  • Direct aid decoupled from the Common Agricultural Policy (basic income support for sustainability, complementary redistributive income support, or complementary aid for young farmers) will be added to the income from the crops or farms of the recipient in proportion to their respective amounts.

    However, when the recipient of direct aid has obtained income from agricultural and livestock activities, other than direct aid, in an amount less than 25% of the total amount of income from such activities, the net return index to be applied to direct aid will be 0.56.

    Precision: The only aid under the Common Agricultural Policy that is affected by the provisions of the preceding paragraph is decoupled direct aid, so all aid linked to specific productions must be added to the income obtained from said productions for the application of the corresponding net return index.

    In these cases, in addition to the general reduction of 5% (2024) and the reduction provided for young farmers, the corrective indices discussed below for agricultural and livestock activities may be applied, if appropriate, since the fact that direct income has not been obtained from these activities does not imply, in any case, that no activity has been carried out, given that receiving direct aid requires recipients to carry out certain maintenance tasks on their farms. Depreciation may also be reduced as appropriate.

  • Public aid provided for in the National Framework for Rural Development in Spain. In this case, when the recipient of direct aid has not obtained any income from agricultural or livestock activities, the net return index to be applied will be 0.56.

  • Subsidies for interruptions in crops or farms . If the subsidy or aid is granted for the interruption of a specific crop or livestock production and is intended to compensate for lost income, the net yield index corresponding to the crop or production that was previously carried out will be applied to the amount that, where applicable, must be computed in the financial year.

  • Subsidies not linked to specific crops or productions . When subsidies are received that are not linked to a specific crop or production, such as those for the withdrawal of land from production or fallow land, the amount of the subsidy that must be computed in the year will be distributed among the remaining crops or farms that the farmer or rancher carries out, in proportion to the income from each of them, subsequently accumulating them to these for the purposes of applying the corresponding net return indices.

  • Subsidies received to contract agricultural insurance . The subsidies received by farmers or ranchers who take out combined agricultural insurance policies, whether received from the State Agricultural Insurance Entity (ENESA) or from the Autonomous Communities, should not be included among the income taken as a basis for determining the net return, since in order to establish the net return indices applicable to each type of crop or product, the cost of the insurance was already taken into account as what the policyholder actually pays, once the subsidized part has been deducted.

  • Insurance compensation . The amount of compensation received from insurance companies as a result of incidents affecting farm products, whether in progress or finished, will be included in the total income corresponding to the type of crop or production in question.

    This type of incident or loss does not include expenses arising from the destruction of animals, so the compensation paid by the insurance to cover expenses arising from the destruction of animals will not be included in the total volume of income from the activities.

  • Certain subsidies or aid from the Community agricultural policy ( CAP ) , as well as other public subsidies that aim to repair the destruction, in certain circumstances, of affected heritage elements, have a special tax treatment, which can be consulted in Chapter 7 of this Manual.

  • Forestry subsidies . Subsidies granted to those who exploit forest farms managed in accordance with technical forest management plans, forest management, forestry plans or reforestation plans approved by the competent forestry authority will not be included in the tax base, provided that the average production period, depending on the species in question, is equal to or greater than 20 years.

  • Extraordinary aid to compensate for the loss of income on affected farms. 

    Article 24 of Royal Decree-Law 7/2024, of November 11, establishes extraordinary and temporary aid, complementary to that of article 11 of Royal Decree-Law 6/2024 referred to in the previous point, to compensate for the loss of income in agricultural holdings that have suffered damage as a result of the DANA, in the municipalities included in the annex of Royal Decree-Law 6/2024, of November 5.

    This aid will be exempt by application of the Fifth Additional Provision of the Personal Income Tax Law. Unlike the previous provision, it is granted under the de minimis aid system, so it is subject to the limits established in the Regulations ( ## ).  

    The aforementioned aid will be granted to the owners of any agricultural, livestock or agricultural plot located in the aforementioned municipalities that have suffered damages greater than 40%. 100% in their production, plantation, livestock census or crop and infrastructure protection system, provided that they are eligible for insurance under the Combined Agricultural Insurance System, provided that they meet the requirements set out in Article 24 for this purpose. 

    The amount will not exceed the limit of 25,000 euros per beneficiary and will be deducted, where applicable, from the direct aid paid under Article 11 of Royal Decree-Law 6/2024. Under no circumstances may the limits established by EU regulations for de minimis aid be exceeded.

    For these purposes, Commission Regulations ( EU) 1408/2013 of 18 December 2013 and 712/2014 of 27 June 2014 should be taken into account.

Note: benefits received from Social Security for temporary disability, risk during pregnancy or provisional disability, where applicable, will be taxed as employment income.