Estimación Objetiva: who is still in and who is not
Estimación Objetiva — the regime everyone calls módulos — computes taxable profit from a set of indices applied to turnover rather than from the real profit of the business. For agriculture and livestock that means starting from the year's receipts and applying to them a net yield index for the crop or product in question, from which certain depreciation charges and the expenses the ministerial order itself admits are then subtracted.
The point that matters is that the regime is not for ever. There are turnover and purchase limits which, once exceeded, push you out from the following year; there are activities that have gradually been taken out of the order; and you can always opt out. The actual amounts and the indices are fixed by an order published each year, so the first thing we do is check the one in force for your year before saying anything at all. The choice between regimes is laid out in direct assessment or módulos.
The year you leave the flat-rate regime
Leaving Estimación Objetiva is not a matter of ticking a different box. You move to Estimación Directa, which taxes the real profit, and that brings an obligation to keep books of income, expenses and capital assets, to support every expense with an invoice, and to pay on account through Modelo 130, the quarterly interim income tax payment, instead of the interim payment proper to módulos.
Under módulos an unsupported expense does you no harm, because nothing is being subtracted. Under direct assessment it does: anything without an invoice in your name is not deductible, and an invoice from three years ago cannot be recovered. The first year outside módulos usually comes out worse than expected for precisely this reason. It is prepared a full year in advance, not in January.
There is also a decision taken on opting out which then ties your hands: the waiver binds you for a minimum period before you can go back, and it drags the simplified VAT regime along with it. It is worth measuring before it is signed rather than afterwards.
When the land is let instead of farmed
Many owners here do not farm: they let. And a rústico letting does not work like an urban one. If what is handed over is bare land, the rent is income from immovable capital, and there is no reduction for residential letting there, because no dwelling is being let. If what is handed over is a going concern — machinery, plantation, means of production — the classification may change, and that is exactly where the argument lies: the answer depends on what is genuinely delivered and on how the contract is drafted, not on the title at the top of it.
Where the tenant is a business or a professional there is an obligation that gets forgotten regularly: the withholding on the letting of urban property and its Modelo 115, the quarterly return for tax withheld on rent. It does not apply to rústico land, but a warehouse, a store or an office is urban, and there the withholding comes back. It is set out in Modelo 111 and Modelo 115.
Who writes to us from Jerez
| Where they come from | What they end up looking at |
|---|---|
| A grower under módulos whose turnover has grown | Whether the limits in this year's order let them stay in or push them out next year |
| An owner who lets the vineyard rather than working it | Immovable capital with no reduction, and what the contract actually says |
| A small bodega starting to sell abroad | Registration on the ROI and Modelo 349 |
| Siblings who inherit land together | A co-ownership, the income attribution regime and Modelo 184 |
| Self-employed in town with premises let to them | The Modelo 115 withholding and the annual summary that has to reconcile |
How we work with clients in Jerez de la Frontera
With the campaign still ahead of us. In a farming business the tax picture as at December can no longer be changed, so the work that is worth anything runs from March to October: settling the regime, weighing up whether to opt out, getting the purchase invoices properly in place and knowing what figures you will reach the year end with.
Everything is handled by email at a fee agreed for the year, with no visits. If you have a farming business and also let something out, the two normally land in the same annual return, so we treat them together rather than as two separate conversations. Where a classification is genuinely open — and with a lease of a going concern it often is — we give you our reading, the risk it carries and what it would take to hold it, and the decision to run that risk is yours. The registration and quarterly side lives in self-employed in Spain.
A leased vineyard and a rented warehouse in Jerez: one owner, two treatments
A very Jerez profile: an owner who does not farm, who leases twenty aranzadas of vineyard (the local land measure) to a neighbouring grower and who also rents a warehouse on an industrial estate to a distribution company. Both incomes are income from real estate capital in IRPF, the Spanish income tax, but the warehouse carries VAT and withholding and the vineyard does not.
| Item | Vineyard (rural land) | Warehouse (urban property) |
|---|---|---|
| Agreed annual rent | 9,000 € | 12,000 € |
| VAT | Exempt: lease of land for farming | +2,520 € charged (21 %) |
| Tenant's withholding | None | −2,280 € (19 %), paid in by the tenant on Modelo 115 |
| What reaches the bank | 9,000 € | 12,240 € |
| IBI (municipal property tax) and insurance | −500 € | −1,300 € |
| Depreciation (3 % of 100,000 € of building value) | — | −3,000 € |
| Net income | 8,500 € | 7,700 € |
The income tax return shows 16,200 € of net income, and the 2,280 € withheld by the tenant is subtracted from the tax due. The mistake we see every year is to declare what reached the bank net of VAT, 9,720 €, as if it were the rent: less income is declared, yes, but the whole withholding is lost, and that withholding comes off the tax euro for euro. It turns out worse than doing it right. How the withholding works is in Modelos 111 and 115.
The calendar of the Jerez warehouse owner, who is not self-employed but does file VAT
| When | What |
|---|---|
| Before signing the lease | Registration in the tax census on Modelo 036, under the heading for letting commercial premises |
| 1 to 20 April, July and October; the fourth quarter until 30 January | Modelo 303 with the VAT on the warehouse rent |
| January | Ask the tenant for the withholding certificate and check it matches the tenant's Modelo 180 |
| April to the end of June | Income tax return with both properties and the tax withheld |
Someone who only lets urban property subject to withholding is usually exempt from the annual VAT summary if they complete the additional information in the last Modelo 303 of the year; this is checked every year against the form in force.
When the warehouse tenant stops paying, the landlord keeps paying in the VAT on every invoice issued and keeps declaring the rent. For income tax, the unpaid amount can be deducted as a doubtful debt once more than six months have passed since the first collection attempt without the debt being renewed; for VAT, the invoice can be corrected to recover the tax, but with short deadlines and formal requirements that allow no shortcuts. Both are prepared from the first bounced payment, not after a year.
There is no Social Security registration for letting premises, and so many people believe there is nothing to declare outside the income tax return either. For VAT, however, letting a warehouse is a business activity: invoices with tax, a quarterly Modelo 303 and books. We have seen warehouses let for years without a single 303, with the tenant deducting VAT that nobody was paying in; when it comes to light, the landlord pays the tax even though it was never collected. If that is where you are, the first step is to tell us about your case here.