2016 Leasing Deductions

NEW DEDUCTION OF 19% AS FROM 1st JANUARY 2016 IN THE LEASING OF PREMISES AND OFFICES.

The tax reform that came into effect on 1st January 2015 contemplated a reduction in the type of deduction for real estate capital yields, fixing 20% for 2015 and 19% for 2016. Royal Decree-Law 9/2015 of 10th July, on urgent measures to reduce the tax burden supported by taxpayers liable to Personal Income Tax and other fixed economic measures, fixed the deduction for real estate capital yields at 19.5% as from 12th July.

We remind you that deductions on account must be made to all concepts making up the gross tax base of the monthly leasing receipt, i.e. that subject to Value Added Tax and which must include the total compensation: both the amount of the accrued rent and all the expenses that the lessor passes to the lessee, such as refuse expenses, drains expenses, water consumption, Property Tax, neighbours’ association fees, services and supplies, etc.

The following real estate capital yields are exempt from deduction:

  • The leasing of housing by companies for their employees.
  • When the rent paid by the lessee to the same lessor does not exceed 900 euros per year.
  • When the lessor proves to the lessee compliance with the obligation to pay tax owing to any of the points of Group 861 of Section One of the Rates of Business Tax approved by Royal Legislative Decree 1175/1990 of 28th September, and it is not a zero quota, or owing to any other point that authorises the activity of the leasing or sub-leasing of urban property, when on applying to the rateable value of the buildings devoted to the leasing or sub-leasing the rules to determine the charge established in the points of the aforementioned Group 861, this is not a zero quota.