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V2762-21 11 November 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

VAT deductibility of urbanisation contributions depends on entrepreneur status and four-year deadline

A taxpayer asks whether VAT can be deducted from urbanisation contributions after a court order returned part of the money via a rectification invoice, since the original invoices were never deducted. The DGT states that deduction is only possible if the taxpayer is an entrepreneur with a commercial intent, and the right expires after four years.

The question raised

Deductibility of the Value Added Tax paid corresponding to the part of the land whose loss of ownership was declared by the aforementioned Supreme Court ruling. Treatment of the corrective invoice received by the taxpayer, taking into account that the taxes corresponding to the original invoices were never deducted.

The DGT's ruling

To deduct VAT, the subject must hold the status of entrepreneur or professional, which requires the intention to sell, transfer, or allocate the land. The deduction is only possible if more than four years have not elapsed since the accrual of the taxes. If the original taxes were never deducted, it is not appropriate to carry out a rectification of deductions upon receipt of a corrective invoice.

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