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V0386-24 12 March 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · bien de inversión

IVD deductible for land and construction if professional intent and requirements met

A professional enquires whether IVA can be deducted on land and construction costs for a clinic and how to regularise it. The DGT states that deduction depends on entrepreneurial status, initial intended use and compliance with IVA Law requirements.

The question raised

Whether the Value Added Tax incurred in the acquisition of the land, architect, and geotechnical study may be deducted and, if so, whether the pro rata of the year in which said VAT is incurred or that of the commencement of the clinic's operations would be applicable, and when the adjustment of the tax incurred in the acquisition of investment goods should be performed.

The DGT's ruling

VAT on land and buildings is deductible if the requirements of direct and exclusive use for professional activity are met. As investment goods, the adjustment must be carried out during the 9 calendar years following acquisition or the commencement of effective use. If the activity has not yet started, provisional deductions may be applied, which shall subsequently be adjusted using the definitive percentage from the first four years of activity.

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