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V2141-17 21 August 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción de cuotas

Business owners in property communities may deduct VAT on common expenses under certain conditions

A query was raised regarding whether business owners within a property community can deduct VAT on services provided to the community. The DGT explains that while the general rule requires invoices to be itemised per co-owner, an exceptional alternative exists based on European case law.

The question raised

Whether co-owners who are taxable persons and business owners may, in proportion to their assigned coefficient, deduct the amounts of input tax corresponding to services provided by third parties to the community of owners. Method of justifying said amounts and the documents that the community of owners must provide for their justification.

The DGT's ruling

Business owners may deduct VAT on common expenses if the invoice breaks down the proportional amount of the taxable base and the tax amount for each owner. Alternatively, if the community is not a taxable person, they may deduct it with an invoice issued in the name of the community and documents proving their participation (bylaws or deed), or with a copy of the invoice certified by the administrator. This exception only applies if the community does not have the status of a business owner in order to prevent fraud.

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