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V1911-14 16 July 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · gestión de cobro de créditos

VAT deductibility on real estate asset management fees depends on property use

An entity inquired whether it could deduct VAT on commissions paid to a manager for loan management and the sale of real estate assets. The DGT ruled that these commissions are subject to VAT and their deductibility depends on whether the properties are used in taxable and non-exempt transactions.

The question raised

Deductibility of Tax amounts paid to the management entity in cases of mortgage foreclosures, conversion or purchase of real estate, in the event of mortgage loans, under the special pro rata regime.

The DGT's ruling

Credit collection management services and real estate asset sales services are subject to VAT when provided by a third party other than the grantor. The right to deduct the amounts incurred for these commissions only applies if the acquired properties are used in the conduct of a business activity through taxable and non-exempt operations. Under the special pro rata regime, commissions relating to properties intended for taxable and exempt activities may not be deducted.

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