Implementation of VAT in compensation for damages

The appeal No. 1688/2012 decided by the Supreme Court, is the case of the award to a community of owners in which the VAT amount necessary to carry out the repair of the homeowners were excluded.

Solve the Court in favour of the inclusion of VAT on repairs to be carried out by saying that it is true that compensation for damages does not accrue VAT as provided in Art. 78.Tres.1º (VAT Law) but not applying the VAT to compensation that the inclusion therein of which the injured party has to pay for it to a third party performing the service in question, as in such a case is necessarily included in the allowance itself damages VAT because, otherwise, it would not be complete as required by art. 1101 and related provisions of the Civil Code. Indeed, as this is the case-like repair some defects or construction defects, the amount of compensation should be fixed taking into account the total amount payable by the injured to repair the defects and construction defects without in this case may raise a possible unjust enrichment of the homeowners in the community as lacking legal personality, is not subject to VAT and therefore cannot compensate it through the submission of a VAT return.

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