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V1469-20 19 May 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · derecho a la deducción

IVA not deductible for administrator and lawyer fees if services relate to exempt activity

A company in bankruptcy proceedings asks whether it can deduct VAT on administrator and lawyer fees. The DGT responds that deduction is not possible because these services relate to a previously exempt activity that does not generate a deduction right.

The question raised

Question posed: Whether the Value Added Tax amounts incurred by the consulting company corresponding to the fees of the insolvency administrator and the law firms that participated in the insolvency proceedings are deductible.

The DGT's ruling

The deduction of VAT requires that the goods or services be used in transactions that are subject and not exempt, or exempt pursuant to Article 94 of Law 37/1992. If the previous activity only generated exempt transactions under Article 20, there is no right to deduction. Likewise, the expenses of the insolvency proceedings are not deductible under Article 111 because they are not considered acquisitions for the new activities, but rather related to the previous activity.

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