Directorate of Taxes issues a tax ruling that analyzes the VAT consequences of the rent write-off made by the lessor during COVID-19

The directorate considered that if the lessor forgives the payment of the rent and it is not exceptionally considered to be subject to VAT, it could not generate distortions in the competition (according to Article 26.2) of the EU VAT Directive).

Consequently, such free-of-charge supplies will not be considered subject to VAT when the lessee cannot carry out any economic activity therein by application of the provisions established during the validity of the state of alarm.

Source: bakermckenzie.com

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