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V1248-14 7 May 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeto pasivo

VAT recovery on vehicle repairs depends on agreements between insurer and insured

A company sought clarification on who the recipient of vehicle repair services is for the purposes of VAT recovery and deductibility when the insurer only pays the taxable amount. The DGT ruled that the recipient is determined by the specific agreements made between the insurer and the insured.

The question raised

Recipient for Value Added Tax purposes regarding repair services for the purpose of tax deductibility.

The DGT's ruling

The recipient of the transaction is the party holding the position of creditor in the legal relationship with the workshop. As a general rule, the recipient is the owner of the vehicle, but if an insurer exists, the recipient shall be the entity or the insured party according to the agreement between both. The workshop must charge the tax to the recipient resulting from said agreements, regardless of whether the insurer pays the taxable base or the total amount of the invoice.

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