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V1922-23 5 July 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · derecho a la deducción

Requirements for VAT deduction on homeowners' association expenses

A real estate leasing company has enquired whether a consumption document issued by a utility provider serves as sufficient evidence to deduct VAT. The Directorate General for Taxes (DGT) has ruled that the document in question does not meet the requirements of a formal invoice and that, as a general rule, members of a homeowners' association cannot deduct the VAT incurred by the association, except in specific circumstances.

The question raised

Possibility of using the received document as proof of the right to deduction.

The DGT's ruling

To deduct VAT, the document must be an invoice that complies with the content requirements of the Invoicing Regulations, including the Tax Identification Number and the address of both the issuer and the recipient. Business owners who are members of a community of owners cannot deduct the VAT incurred by the community because it is not directly charged to them, unless they possess a duplicate of the invoice in the name of the community (applying CJEU case law) or the invoice breaks down the proportional part for each owner. Furthermore, the deduction is only permissible if the goods or services are used in transactions that are taxable and not exempt.

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