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V0514-22 14 March 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · deducción de cuotas

Deductibility of VAT and IRPF on investment expenses in economic activity

The consultant asks about the deductibility of investment costs in a building for economic activity under VAT and IRPF. The DGT responds that under VAT, direct and exclusive allocation is required, while under IRPF, expenses must be linked to income generation and properly justified.

The question raised

Deductibility of such expenses in Value Added Tax and in Personal Income Tax.

The DGT's ruling

In VAT, quotas are deductible if the taxable person is an entrepreneur or professional and there is an intention to allocate the assets to the activity. Investment goods allow for partial deduction if their allocation is partial, which must be regularized if the degree of use varies. In Personal Income Tax, expenses are deductible if they are linked to the generation of income, correctly recorded, and justified. For real estate, the deductibility of construction costs requires that the asset be a patrimonial element allocated to the activity.

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