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V2598-20 30 July 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · autoconsumo de servicios

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

A commercial premises owner sought clarification on whether waiving rent due to the COVID-19 state of alarm was subject to VAT. The DGT clarifies that while a total waiver is typically considered self-consumption subject to tax, in this specific instance, no tax liability arises if the tenant is unable to carry out their activity due to state of alarm containment measures.

The question raised

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

The DGT's ruling

The partial forgiveness of rent after it has accrued allows for a reduction of the taxable base. The total forgiveness of rent is usually considered self-consumption of services subject to VAT. However, self-consumption derived from the forgiveness of rent for a business premises shall not be subject to the tax when the lessee is unable to carry out any economic activity therein due to the application of the provisions of the state of alarm.

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