Exemption from Economic Activities Tax: the calculation of turnover in groups of companies must be determined without taking into account intra-group eliminations

The Central Economic-Administrative Court (TEAC, its acronym in Spanish), in its ruling of 18 September 2025, clarifies how the turnover of a group of entities should be calculated for the purposes of determining whether or not the exemption from Economic Activities Tax (IAE, for its acronym in Spanish) established for entities with a net turnover figure (INCN, its acronym in Spanish) of less than one million euros is applicable.

The TEAC recalls in its ruling that the Local Taxes Law provides that, when an entity is part of a group of companies, the INCN shall refer to all the entities belonging to that group. It also notes that the concept of INCN is regulated in the Commercial Code as a figure comprising ‘the amounts from the sale of products and the provision of services’, without this definition providing for the deduction of internal transactions between companies belonging to the group.

Consequently, the Court rules that the INCN that sets the threshold for the application of this exemption is the aggregate amount corresponding to all the entities belonging to the same group of companies, without deducting the amount of intra-group transactions.