Example: Exemption from business and professional assets

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

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

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

Solution:

To calculate the main source of income of Mr. AHC The remuneration received for the management functions performed in the entity in which it holds shares exempt from Wealth Tax is not taken into account. Therefore, 50 percent of the taxpayer's general tax base and Personal Income Tax savings amounts to:

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

The net income from the activity for the current year amounts to 29,000 euros, which is greater than 50 percent of the taxpayer's Personal Income Tax tax base. Consequently, the assets and rights related to business activity are exempt from Wealth Tax in fiscal year 2019.

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