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V3202-19 19 November 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción de cuotas

Lease of industrial premises subject to VAT; deduction possible if recipient

A company asks whether VAT on the demolition and construction of premises owned by its partners is deductible. The DGT states that the lease of such premises is subject to 21% VAT and examines the rules on taxable base based on linkage and the right to deduction.

The question raised

Deductibility of Value Added Tax incurred by the consulting company.

The DGT's ruling

The amounts incurred for the acquisition of goods and services, such as the demolition and construction of warehouses, may be deducted if the company is the recipient of the operations and uses them in its business activity. If the activity generates a right to deduction, the amounts may be deducted pursuant to Article 92 of the VAT Law. In the event of concurrent operations with and without a right to deduction, the pro rata rule shall apply. Furthermore, it is noted that the execution of works could be subject to the taxpayer's investment if the requirements of Article 84.One.2.f) are met.

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