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V0001-16 5 January 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · régimen especial de grupo de entidades

Non-deductible VAT costs excluded from the tax base of intra-group transactions

A company sought guidance on calculating the tax base for the transfer of real estate to its subsidiary under the special group of entities regime (advanced modality) when the VAT on construction costs was non-deductible. The DGT ruled that these costs must be excluded to prevent inconsistencies and double taxation.

The question raised

Calculation of the taxable base of the real estate assignment service by the taxpayer to its subsidiary, insofar as the VAT incurred by the taxpayer in its construction has not been deductible.

The DGT's ruling

In the advanced modality of the group of entities regime, the taxable base of intra-group transactions is constituted by the cost of goods and services for which the tax has been effectively incurred or satisfied. Therefore, those costs for which the tax has been incurred but which have not been deductible for the entity shall not be included in the taxable base of the assignment or lease. If a final resolution subsequently determines that said quotas were indeed deductible, the taxable base of the intra-group transaction must be modified to include those costs.

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