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V3053-23 23 November 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · comunidad de bienes

Professionals may deduct VAT on common community of property expenses if the entity is not a business

Two insurance agents with a community of property to share expenses consulted whether the community is a taxable person for VAT purposes and how to deduct their input tax. The DGT ruled that the community is not a taxable person if members maintain separate activities and established the conditions for deduction.

The question raised

Question raised: Consideration of the community of property as an entrepreneur or professional for Value Added Tax purposes. Obligations of the community of property regarding invoicing to both co-owners. Deductibility by the co-owners of the amounts incurred for common expenses.

The DGT's ruling

If the community of property does not hold the status of entrepreneur or professional because the members assume the risk individually, it is not a taxable person for VAT purposes. In this case, members may deduct the amounts incurred through invoices that itemize their proportional share. Alternatively, according to CJEU case law, if the community is not an entrepreneur, members may deduct VAT using an invoice issued in the name of the community even if it does not itemize their share, provided they prove their percentage with other documents.

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