Skip to content
Back to index
V0206-21 9 February 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Payments for minimum profitability guarantees in hotel management are subject to VAT

A company owning a hotel has queried whether payments received from a management company to guarantee a minimum level of profitability are subject to VAT. The DGT has determined that such amounts constitute consideration for the transfer of exploitation rights and must be taxed at the standard rate.

The question raised

Liability for Value Added Tax purposes regarding said payment.

The DGT's ruling

The amount paid by the manager to ensure a minimum profit functions as consideration for the operation of transferring the hotel exploitation. As it is not compensation for the loss of assets or rights, but rather a mechanism to secure a price, the operation is subject to VAT. Therefore, the owner must charge the tax to the management company at the general rate of 21 percent.

Book your free first meeting