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A municipality asks whether it can deduct VAT on project design and contractor invoices for building homes. The DGT responds that if the municipality carries out both commercial and non-commercial activities, it must apply the dual entity deduction regime and the prorata rule.
Municipalities carrying out both commercial and non-commercial activities must apply the dual entity deduction regime and prorata rule when deducting VAT on construction-related expenses.
The tax team reviews your specific situation.
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