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V2651-19 26 September 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento de bienes

Leasing of premises with a rent-free period and tenant-funded works is subject to VAT

An individual leases a commercial premises with a rent-free period during which the tenant carries out refurbishment works. The DGT has ruled that the transaction is subject to VAT because there is a consideration in kind (the works) which constitutes the value of the service during that period.

The question raised

Whether said operation would be subject to Value Added Tax and, if applicable, the taxable base and the accrual thereof.

The DGT's ruling

The lease is considered to be for consideration when the lessee undertakes to assume expenses, such as refurbishment works, during the grace period. The taxable base shall be the amount agreed upon for the non-monetary consideration (the value of the works). The tax accrues when the part of the price becomes due, or on December 31 for the proportional part of the value of the works carried out if its due date has not been determined.

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