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V0002-16 5 January 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · régimen especial de grupo de entidades

Intragroup transaction tax bases must exclude non-deductible VAT costs

A company sought guidance on calculating the tax base for the transfer of a property 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 should be excluded to prevent inconsistencies and double taxation.

The question raised

Calculation of the taxable base for the service of leasing real estate by the taxpayer to its subsidiary, insofar as the VAT incurred by the taxpayer during its construction was not deductible.

The DGT's ruling

In the advanced modality of the group of entities regime, the taxable base of intra-group transactions shall not include the taxes incurred if such tax was not deductible for the entity. If a final resolution subsequently determines that the tax was indeed deductible, the taxable base of the intra-group transaction must be modified to include those costs. This prevents transferring the cost of non-deductibility to the subsidiary entity.

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