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V2133-22 11 October 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prorrata de deducción

Property sales may be excluded from VAT prorata if deemed ancillary or non-habitual

A fund manager asks whether the sale of properties allocated to its funds constitutes an ancillary activity not subject to prorata deduction calculation. The DGT states that to determine this, one must first assess whether it constitutes an economic activity and then whether it meets the criteria for ancillarity.

The question raised

Whether real estate sales transactions constitute ancillary real estate transactions for the purposes of determining the VAT deduction pro rata.

The DGT's ruling

To determine whether real estate transactions are ancillary and thus excluded from the pro rata calculation, two cumulative requirements must be met. The first is qualitative: the transactions must involve a very limited use of goods or services subject to VAT and must be related to the main activity. The second is quantitative: the transactions must not be more significant than the main activity, although the magnitude of income is not the sole factor for ruling out ancillary status.

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