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V3083-16 4 July 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · pagos anticipados

VAT on advance payments may be recoverable if housing development project is cancelled

A member of a housing cooperative has enquired whether they can recover VAT paid on advance payments if the development fails due to insolvency. The Directorate General for Taxes (DGT) has ruled that if the transaction is rendered void, a modification of the tax base occurs, allowing for a tax rectification.

The question raised

In the event that, due to the developer's insolvency, the delivery of the dwellings does not take place, whether the taxpayer will have the right to recover the tax paid.

The DGT's ruling

If the housing development operation is rendered void by judicial or administrative resolution, or by commercial custom, the tax base must be modified in its entirety. The cooperative must issue a corrective invoice and regularize the tax situation in the corresponding tax return. Likewise, the cooperative is obliged to refund the amount of the fees initially charged to the member who bore them.

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