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V1971-17 21 July 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · comunidad de bienes

Renting property to a foundation for third-party use may be VAT-exempt if no consideration is paid

A brother and sister seek advice on IAE and VAT implications of renting property to a foundation for mentally disabled individuals. The DGT determines that the community of property is the VAT liability party, and VAT exemption depends on whether the foundation acts as a business subletting at a charge or grants use free of charge.

The question raised

Various issues relating to the taxation of the lease and formal obligations.

The DGT's ruling

If the foundation does not receive consideration from the end users, the lease is subject to and exempt from VAT. The community of property is the taxable person for VAT and is obliged to file census and third-party transaction returns. The lessee must apply withholding tax under Personal Income Tax (IRPF) unless the exceptions set forth in the Income Tax Regulations (RIRPF) are met.

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