Tax incentive to promote the reduction of rental income

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Article 13. Tax incentive to promote the reduction of rental income.

Effective January 1, 2021, an additional forty-ninth provision is added to Law 35/2006, of November 28, on Personal Income Tax and partial modification of the Corporation Tax laws, on Non-Resident Income and on Equity, with the following wording:

«Additional provision forty-ninth. Expenses deductible from the income from real estate capital corresponding to the rental of premises to certain entrepreneurs during the 2021 tax period

Landlords other than those provided for in section 1 of article 1 of Royal Decree-Law 35/2020, of December 22, on urgent measures to support the tourism, hospitality and trade sectors and in tax matters, who have signed a lease contract for use other than housing, in accordance with the provisions of article 3 of Law 29/1994, of November 24, on Urban Leases, or industry, with a tenant who uses the property for the development of a economic activity classified in division 6 or in groups 755, 969, 972 and 973 of the first section of the rates of the Tax on Economic Activities approved by Royal Legislative Decree 1175/1990, of September 28, may compute in 2021 for the calculation of the performance of the real estate capital as a deductible expense the amount of the reduction in the rental rent that they would have voluntarily agreed to as of March 14, 2020 corresponding to the amounts accrued in the months of January, February and March 2021.

The landlord must report separately in his tax return the amount of the deductible expense referred to in the previous paragraph for this incentive, also stating the tax identification number of the tenant whose rent has been lowered.

The provisions of this provision shall not be applicable, when the reduction in the rental rent is subsequently compensated by the lessee through increases in subsequent rents or other benefits or when the lessees are a person or entity related to the lessor in the sense of article 18 of the Corporation Tax Law.

Article 15. Reduction of the term for the amounts owed by the tenants to be considered a doubtful balance.

The period of six months referred to in number 2 of letter e) of article 13 of the Personal Income Tax Regulation will be reduced to three months in the years 2020 and 2021.

By regulation, the term provided for in this article may be modified.