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V3276-14 5 December 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducibilidad de gastos

Property tax (IBI) is deductible for Corporation Tax if it is a contractual obligation

A supermarket chain inquired whether the payment of Property Tax (IBI) for leased premises constitutes a deductible expense for Corporation Tax. The Directorate General for Taxes (DGT) ruled that it is deductible provided it is a requirement under the lease agreement and meets all accounting and substantiation requirements.

The question raised

The taxpayer asks whether the payment of the Real Estate Tax (IBI) made by the consulting entity to the City Council would constitute a tax deductible expense in Corporate Income Tax.

The DGT's ruling

The payment of IBI is tax deductible provided that the conditions of accounting registration, accrual basis, correlation with income, and documentary justification are met. In this specific case, the expense shall be deductible to the extent that its payment arises from an obligation established contractually in the lease agreement. The Administration may verify the reality of the transaction and the assessment of the evidence.

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