19 Ene Taxation of the donation of a property from a company to a foundation that will put it up for rent
When a company considers donating a property to a foundation, it may be interested in knowing how it will be used, it does not seem the same to use a flat to accommodate people in poverty than to rent it out at market prices and earn income from it. In this case, the donor can consider whether for tax purposes the fact that the foundation does not affect the property for its foundational activity, but for economic exploitation, may affect in some way the deduction to which it would be entitled for a donation to an entity under Law 49/2002 on patronage incentives.
And it is that this differentiation was modified with respect to the previous legislation that did distinguish between the taxation of donations of real estate that were going to affect foundational activities from those that were not. In fact, it continues to be so for non-profit entities to which title II of Law 49/2002 does not apply, that is, those contemplated in article 9.3 of the LIS.
We analyze the Taxation in Corporate Tax for both entities in the cases in which the donated properties are not going to be totally or partially used for its foundational purposes.
In regards to the foundationarticle 6 of the Law 49/2002 of December 23, on the tax regime of non-profit entities and tax incentives for patronage indicates that they will be exempt from Corporation Tax, among others:
“1st Those derived from the following income:
- a) The donations and donations received to collaborate in the purposes of the entity, including the contributions or donations as patrimonial endowment, at the time of its constitution or at a later time, and the economic aid received by virtue of the agreements of business collaboration regulated in article 25 of this Law and by virtue of the advertising sponsorship contracts referred to in Law 34/1988, of November 11, General Advertising.
- b) The quotas paid by the associates, collaborators or benefactors, as long as they do not correspond to the right to receive a benefit derived from a non-exempt economic exploitation.
- c) Subsidies, except those intended to finance non-exempt economic exploitations.
2.º Those from the movable and real estate assets of the entity, such as dividends and shares in company profits, interest, royalties and rents.”
3rd The derivatives of acquisitions or transmissions, by any title, of goods or rightsincluding those obtained on the occasion of the dissolution and liquidation of the entity.”
In point 3 we see that the Law exempts the foundation from paying taxes for the IS for the donations received, without the requirement of affecting it to its foundational activity. Additionally, and regarding the case we are studying, we see that point 2 makes explicit reference to the income obtained from rentals. A different thing will be the requirement to reinvest the income obtained in the foundation itself, for which the Law establishes a minimum of 70%.
As to the donor company Likewise, tax benefits may be applied to patronage, in relation to with the entire real estate assets that will be donated and it is that the article of the Leynotes that “The following donations, donations and irrevocable contributions, pure and simple, made in favor of the entities referred to in the previous article will give the right to practice the deductions provided for in this Title:
- a) Donations and donations of money, goods or rights.
- b) Affiliation fees to associations that do not correspond to the right to receive a present or future benefit.
- c) The constitution of a real right of usufruct over assets, rights or values, carried out without consideration.
- d) Donations or donations of assets that are part of the Spanish Historical Heritage, that are registered in the General Registry of assets of cultural interest or included in the General Inventory referred to in Law 16/1985, of June 25, on Heritage Historical Spanish.
- e) Donations or donations of cultural assets of guaranteed quality in favor of entities that pursue among their goals the realization of museum activities and the promotion and dissemination of artistic and historical heritage” without being required to contribute to carrying out the activities carried out in compliance with the purposes of the non-profit entity.
Therefore, we conclude that donations of real estate from a company to a foundation are exempt from IS for the foundation and do allow companies to benefit from the corresponding tax, regardless of the use that is given to them.
As for the other non-profit entities, they will be taxed in a substantially different way, so we recommend that in the event of a similar situation they receive proper advice.
See also: Donations of assets to foundations made by companies
Image from rawpixel.com on Freepik
