Example: Exemption of business and professional assets

Mr. AHC In 2019, he regularly, personally and directly carried out a business activity from which he obtained a net income of 29,000 euros. The general and savings tax base of IRPF declared by Mr. AHC In this exercise it amounts to 60,000 euros. The value of all assets and rights related to the economic activity carried out, for the purposes of the Wealth Tax, is 200,000 euros.

Mr. AHC has received a total of 3,000 euros during 2019 for the performance of certain management functions entrusted to him by the Board of Directors of an entity in which he holds shares exempt from Wealth Tax.

Determine whether the assets and rights of Mr. AHC affected by the business activity carried out by the same are or are not exempt from the Wealth Tax in 2019.

Solution:

For the calculation of the main source of income of Mr. AHC remuneration received for management functions performed in the entity in which the individual holds shares exempt from wealth tax is not taken into account. Therefore, 50% of the general tax base and savings of the IRPF of the taxpayer amounts to:

50% of (60,000 – 3,000) = 28,500 euros

The net income from the activity in the current year amounts to 29,000 euros, which is greater than 50% of the taxpayer's taxable base of IRPF . Consequently, assets and rights related to business activity are exempt from Wealth Tax in the 2019 financial year.

Comment : Since it depends on a certain level of income, it may happen that the same taxpayer is entitled to the exemption in a certain year and not in the next.