Frequently asked questions in relation to VAT on property rentals

VAT is accrued at the time the income becomes payable.

When the moment of payment due has not been determined, or it has been established with a periodicity greater than one calendar year, the accrual of the Tax will occur on December 31 of each year for the proportional part corresponding to the period elapsed since its beginning, or since the previous accrual, until the aforementioned date.

If there is a grace period, VAT is not accrued, unless said grace period corresponds to a reduction in the rental price due to the assumption by the tenant of certain obligations in favor of the lessor, for example, the performance of conditioning works in a local. In that case, VAT is accrued on December 31 for the proportional part of the value of the works from their beginning until said date. Consultation DGT V2651-19.

In the event of non-payment by the tenant, the VAT corresponding to the rental of the property will continue to accrue for the duration of the rental contract. However, the owner may consider the credit as uncollectible and proceed to reduce the tax base, with the requirements of article 80.Four of Law 37/1992.

In the event that the landlord and tenant agree to the suspension of the rental contract or a moratorium, suspension or deferment in the payment of rent, as may be the case in the case of the temporary closure of the business due to COVID-19, the accrual of VAT during said suspension, moratorium or grace period. If a reduction in the rental amount is agreed, the VAT will be 21% of the amount of the new agreed rent.

It must be taken into account that, if there is no evidence of such an agreement with the tenant, the mere non-payment of rent will not prevent the accrual of VAT. In order to reduce the tax base due to non-payment, the requirements established in article 80 must be met. Four LIVA .

The accreditation of such agreement may be carried out by any of the means of proof admitted by law, which will be assessed by the AEAT .

Accrual occurs at the time of full or partial collection of the income, for the amounts actually received, or on December 31 of the year immediately following the year in which the transaction was carried out, if collection has not occurred.

In the event of non-payment by the tenant, the VAT corresponding to the rental of the property will continue to be accrued, for the duration of the rental contract . However, the owner may consider the credit as uncollectible on December 31 of the immediately following year (when the accrual occurs) and proceed to reduce the tax base without having to enter the VAT, with the requirements of article 80. Four of Law 37/1992.