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V2053-20 23 June 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · autoconsumo de servicios

VAT not applicable to self-consumption via rent waiver if tenant cannot operate due to state of alarm

A commercial premises owner enquired whether waiving a tenant's rent due to the state of alarm was subject to VAT. The DGT ruled that while total rent waivers are typically considered taxable self-consumption of services, in this specific case, no VAT liability arises.

The question raised

Whether said monthly payments would be subject to Value Added Tax.

The DGT's ruling

The total forgiveness of rent for a business premises is generally considered self-consumption of services subject to VAT. However, when the forgiveness is a consequence of the state of alarm and the lessee is unable to carry out economic activity on the premises, said operation shall not be subject to the tax as it does not create distortions of competition. In the event of partial forgiveness, the taxable base shall be modified if it is carried out after the accrual, or the rent shall be reduced if it is agreed upon before or simultaneously with the accrual.

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