Recent Supreme Court (TS) jurisprudence appears to be moving towards a more flexible interpretation of the requirement for the organization of material and human resources in corporate structures dedicated to real estate leasing. This factor is particularly relevant for both groups of companies and individual companies, as it often determines access to significant tax benefits, such as reductions in Inheritance and Gift Tax (ISD) or exemptions from Wealth Tax (IP).
The debate: the employee requirement
The analysis revolves around article 27.2 of the LIRPF, which requires that entities dedicated to the leasing of real estate have at least one person employed with a full-time employment contract in order for the activity to be considered economic for these purposes.
The controversial issue arises in groups of companies: whether this requirement can be considered fulfilled when the management of the lease is carried out in a centralized or shared manner within the group, even if the employee is formally employed by another company within the same group.
Evolution of the Supreme Court's criteria
The Supreme Court has been reviewing the strict application of this requirement in recent years, especially in cases where the activity is carried out within groups of companies.
In this context, it has analyzed whether the requirement for full-time employees should be interpreted in a strictly formal way or whether, on the contrary, the economic reality of the organization should be taken into account, especially when the management of the lease may be centralized or distributed within the group.
Furthermore, recent case law has focused on the economic substance of the activity, admitting in certain cases that the effective organization of human resources within the group may be relevant to assess the existence of economic activity, without limiting the analysis to the formal ownership of the worker in a single company.
Jurisprudential trends in groups of companies
In light of these rulings, it is clear that the Supreme Court is moving away from an overly formal interpretation of the human resources requirement, and towards a more focused approach on the functional reality of the group.
In this regard, the Court admits that, when the lessor is part of a group with economic activity and the management of the lease is carried out using personal and material resources of the group itself, the requirement of a full-time employee can be considered fulfilled, even if these resources are in other companies.
However, this doesn't happen automatically. It requires a supporting economic reality. In other words, the group must function as a unit, with effectively integrated resources and activities, and the leasing company must not be an isolated entity.
When this does not occur and there is only formal membership in the group, without actual integration of the activity, this criterion cannot be applied. In that case, the requirement must be met within the leasing company itself.
Ultimately, the key lies in whether or not there is a real integration of economic activity within the group.
Conclusions
In short, the Supreme Court's criteria seem to be evolving towards a more realistic view of business organization, in which the effective role of staff in lease management, especially in group structures, becomes particularly important.
From a practical point of view, this evolution can have a relevant impact on the estate and corporate planning of family and real estate structures.
However, since there is still no fully consolidated criterion, it is prudent to maintain an individualized analysis, reviewing in detail both the corporate structure and the actual allocation of human resources in each case.
Noelia Roig Grill
Tax Area Collaborator.
