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V1937-24 9 September 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción

VAT deduction for repairs and renovations depends on economic activity impact and property nature

A company asks whether it can deduct VAT on repairs and renovations of properties acquired for startup. The DGT responds that deductibility depends on whether the properties and renovations are considered investment assets and on their direct impact on economic activity.

The question raised

Deductibility of the Value Added Tax installments incurred.

The DGT's ruling

Only installments for goods or services directly and exclusively used for the activity that grants the right to deduction are deductible. If the real estate constitutes investment assets, repairs and maintenance are deducted according to their intended use in the activity. Renovations may be considered investment assets if they exceed 3,005.06 euros and meet the requirements of duration and function. It is essential that the intention of professional use exists at the time the installments are incurred.

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