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V2272-19 22 August 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · exención

Renunciation of VAT exemption allows deduction for property rental

A professional asks whether purchasing a property for rental is VAT-exempt and whether the VAT paid can be deducted. The DGT states that if conditions are met, the seller may renounce the exemption so the buyer can claim the VAT deduction.

The question raised

Whether the exemption provided for in Article 20.One.22º of Law 37/1992 would apply to the delivery of said premises. Deductibility, where applicable, of the Value Added Tax amounts incurred.

The DGT's ruling

The delivery of a building may be exempt if it is a second or subsequent delivery following its construction. However, the transferor may waive the exemption if the transferee is a taxable person with the right to deduction for their activity. The tax amounts incurred in the acquisition shall be deductible if there is an intention to allocate them to a taxable and non-exempt business activity, such intention having to be proven through objective elements.

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