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V4750-16 10 November 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · convenio de colaboración empresarial

Free transfer of property to a foundation may be treated as collaboration agreement or donation

A foundation asks whether a company can deduct rental expenses if it transfers property free of charge to the foundation via a collaboration agreement. The DGT explains that such assistance can be in kind and examines the tax treatment under Corporate Income Tax and VAT.

The question raised

Question raised 1) Whether the amount currently paid by the collaborating company in respect of rent may continue to be a tax-deductible expense in its Corporate Income Tax return.

The DGT's ruling

The gratuitous transfer of the use of real estate by a company to a foundation, within the framework of a business collaboration agreement, constitutes an operation subject to VAT at the general rate. As it is a taxable rather than an exempt transfer, the collaborating company retains the right to deduct the tax amounts incurred from the lease of the real estate, provided that it complies with the requirements of the VAT Law.

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