2. Purchase, Inventory Variation and Other Operating Consumption

The following concepts are included in this category and are differentiated in the IRPF declaration.

a. Purchase of stocks (merchandise and raw materials)

This category includes current purchases of goods made from third parties, provided they meet the following two requirements:

That they are carried out to obtain income.
That they are assets that are part of current assets.

Additional expenses must be included in the acquisition price, such as transportation, insurance, loading and unloading and others directly attributable to the acquisition, as well as the taxes that fall on them except deductible input VAT.

Therefore, the non-deductible input VAT will form part of the acquisition price. This rule is equally applicable, where applicable, to IGIC and any other indirect tax incurred in the acquisition of assets or services, which is not directly recoverable from the Public Treasury.

This price is the amount invoiced by the seller (after any discount, price reduction or similar, as well as the interest incorporated into the nominal amount of the debts), which will include the additional costs that occur until the goods are located for sale (transport, tariffs, insurance...).

b. Inventory variation (only if there is a decrease in inventory at the end of the year)

To determine the consumption of stocks during the year, it is necessary to determine, in addition to taking into account the purchases made, the stocks not consumed in the year, that is, the variation in stocks. Thus, when the initial stock is greater than the final stock, that is, when there is a decrease in the latter, this variation will be reflected as an expense for the year.

Unlike the above, when the stock at the beginning of the year is less than at the end of it, that is, when there is an increase in stock, it will be reflected as income.

As regards the valuation criteria for stocks , it should be emphasised that the value of the final stocks, which must coincide with the value of the initial stocks for the following year, can be determined by their acquisition price or production cost, with the weighted average cost and FIFO being accepted as valuation criteria for homogeneous groups of stocks.

See within "Computable gross income" the section on " Change in stock " as well as the registration and valuation rule 10 of the General Accounting Plan, approved by Royal Decree 1514/2007, of November 16 ( BOE of November 20), dedicated to the valuation of stock. See also the Resolution of April 14, 2015, of the Institute of Accounting and Auditing of Accounts, which establishes criteria for determining the cost of production.

c. Other operating consumption

This includes the consumption of other supplies (other than merchandise and raw materials) intended for the production process or used in the provision of services (incorporable elements and assemblies, fuels, spare parts, various materials, containers, packaging, office supplies, etc.).

Tax treatment of partial refund for diesel for professional use and for diesel used in agriculture, livestock and fishing

Since taxpayers of IRPF must be subject to the rules provided for taxpayers of IS , the registration and valuation rule 10 (Stocks) must be taken into account, which establishes in its section 1 that indirect taxes that tax stocks will only be included in the acquisition price or production cost when they are not directly recoverable from the Public Treasury.

The Hydrocarbon Tax is an indirect tax that is recoverable directly from the Treasury, so the part that is returned does not form part of the purchase price of the fuel, that is, it would not be a tax-deductible expense or income from the activity.

If exceptionally it is not directly recoverable, the payment of the Tax would be a deductible expense and the refund of part of it would constitute income from the activity.

Incorporatable elements and assemblies are understood to be those normally manufactured outside the company and acquired by it to be incorporated into its production without being subjected to transformation.

In the case of fuels, only the consumption of energy materials that can be stored will be included.

Spare parts are parts intended to be installed in installations, equipment or machines to replace similar ones.

Miscellaneous materials are understood to be other consumable materials that are not to be incorporated into the manufactured product.

The consumption of the year will be the result of adding to the initial stock of such goods, the acquisitions made during the year, and of reducing said sum by the value of the final stock of the period.

Note: Unlike the stock of merchandise and raw materials, in the case of “Other operating consumption” only what was consumed in the year will be reflected.