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V1468-23 31 May 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · gastos generales

Overhead costs are deductible using the pro rata method

A company engaged in property leasing has enquired whether its overheads (professional services, management support, and office costs) are deductible. The Directorate General for Taxes (DGT) has ruled that, as these are general expenses benefiting the economic activity as a whole, they are deductible by applying the pro rata rule.

The question raised

Deduction of general business expenses such as independent professional services.

The DGT's ruling

General business expenses, even if they do not have a direct and immediate relationship with transactions that are taxable and not exempt, are deductible if they represent a general benefit for the entrepreneur. When the entity carries out transactions with a right to deduction (rental of premises) and others without a right (leasing of housing and rural land), the deduction of these expenses shall be carried out through the application of the general or special pro rata rule.

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