Skip to content
Back to index
V0609-18 7 March 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Compensation for tenant's waiver of rights is subject to VAT as consideration for a service

A query was raised regarding whether compensation received by a tenant due to the early termination of a lease agreement is an exempt indemnity or consideration subject to VAT. The DGT has determined that the waiver of lease rights constitutes a provision of services subject to the tax.

The question raised

Consideration of the described transaction as compensation that does not constitute consideration, or alternatively as consideration for the waiver of leasehold rights, for the purpose of determining its liability or non-liability for Value Added Tax.

The DGT's ruling

The waiver of rights by the lessee is a transaction subject to VAT, as the compensation constitutes the consideration for the service of restoring possession of the property to the owner. The lessee is the service provider and the taxable person, and therefore must charge the tax by means of an invoice. This criterion differs from cases where the lessee pays the lessor, in which case the amount is considered non-taxable compensation.

Book your free first meeting