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V2840-14 20 October 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · derecho a la deducción

VAT deduction for renovation works carried out prior to the commencement of leasing activities

A taxpayer inquired whether VAT on renovation works performed on a premises before it was leased could be deducted. The DGT ruled that deduction is possible provided there is evidence of the intention to use such works for a business activity.

The question raised

Whether the Value Added Tax incurred on the renovation works of said premises, executed from 2011 to 2013, is deductible.

The DGT's ruling

The status of entrepreneur is acquired from the moment of acquiring goods or services with the intention of allocating them to a business activity. The tax amounts incurred prior to the commencement of the habitual supply of goods or services may be deducted pursuant to Articles 111, 112, and 113 of Law 37/1992. The taxpayer must prove through means of evidence the intention to allocate the works to the activity. If the purpose is exclusively to carry out transactions that are taxable and not exempt, the provisional deduction shall be one hundred percent.

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