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V3433-20 26 November 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Subject passive investment in construction works is deductible by prorata application

An association asks whether it can deduct VAT on invoices for subject passive investment in construction works carried out on its premises. The DGT responds that, as a business, the association is a subject passive of investment and may deduct such shares by prorata if it carries out activities both with and without deduction rights.

The question raised

Deductibility of the Value Added Tax amounts accrued in the operation.

The DGT's ruling

The association acts as an entrepreneur or professional, therefore the reverse charge mechanism applies to the construction or renovation works of which it is the recipient. The tax amounts accrued for these operations may be subject to deduction by the taxable person. If the entity carries out operations with a right to deduction and others without a right jointly, it must apply the pro rata rule to determine the deductible amount.

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