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V1869-23 28 June 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · empresario

VAT entrepreneur status depends on intent to sell, and late payment interest is non-deductible

The taxpayer queried whether participation in a compensation board qualifies them as a VAT entrepreneur and whether interest on unpaid levies is deductible. The DGT ruled that entrepreneur status depends on the intention to sell the land and that late payment interest is non-deductible as it constitutes compensation.

The question raised

For the purposes of Value Added Tax, it is questioned whether the consultant holds the status of entrepreneur or professional for Value Added Tax purposes and whether, in the Value Added Tax self-assessment, they may deduct the interest generated by the assessment not paid on time.

The DGT's ruling

Landowners participating in a compensation board acquire the status of entrepreneurs for VAT purposes if they pay assessments with the intention of applying the land to a business or professional activity. If there is no intention of subsequent sale, transfer, or allocation, such status is not acquired. Interest generated by the delay in the payment of assessments is compensatory in nature and does not form part of the VAT taxable base, and therefore cannot be subject to deduction.

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