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V1893-17 18 July 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · destinatario jurídico

Joint ownerships may deduct VAT on repair works and must pass it on when re-invoicing expenses

A real estate development joint ownership carries out repair works following a court ruling and agrees to recover the costs from other liable parties. The DGT rules that the joint ownership is the legal recipient of the works, is entitled to deduct the VAT, and must pass this cost on when re-invoicing the expenses to the other responsible parties.

The question raised

Deductibility by the consultant of the invoices received as a consequence of the execution of the works.

The DGT's ruling

The community of property is the recipient of the works as it is the party legally obligated to make the payment of the consideration, regardless of who makes the actual payment. Therefore, it may deduct the input tax following the general VAT rules. When reinvoicing these expenses to the other condemned parties, the community acts as a business operator and must charge the corresponding tax. Regarding Personal Income Tax, the income from the reimbursement of expenses must be attributed to the period in which the accrual of the works performed occurs.

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