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V0173-22 3 February 2022 · SG de Tributos Locales Criterion in force
OTRO · icio

Industrial profit, overheads, security or quality expenses do not form part of the ICIO tax base

A company asks whether concepts such as overheads, industrial profit, security, hygiene, quality control, and the cost of machinery should be included in the ICIO tax base. The DGT responds that these concepts do not form part of the tax base, except for the cost of their installation or if they are inseparable elements of the work.

The question raised

Question posed: Whether the following items must be incorporated into the ICIO tax base: overheads, industrial profit, occupational security and hygiene expenses, quality control expenses, the cost of machinery, and other elements necessary for the development of the activity that will be placed in the new built-up area.

The DGT's ruling

Industrial profit, overheads, security and hygiene expenses, and quality control expenses do not form part of the ICIO tax base and may be deducted if they appear in the submitted project. The cost of machinery constructed by third parties outside of the work is not included, although the cost of its installation is. Only elements inseparable from the work that appear in the project and lack their own identity with respect to the construction are included. To include machinery, it must be necessary for the execution or provide essential services for habitability or use.

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