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VAT practical manual 2021.

Deductions in separate sectors of the business or professional activit

The deduction regime for each differentiated sector of business or professional activity is applied independently for each sector.

In the case of goods or services used in several different sectors, the general proportion is applied to determine the applicable deduction percentage. To calculate this percentage, it is considered that the operations included in the special regimes for agriculture, livestock and fishing or the equivalence surcharge do not give rise to the right to deduct.

On the website of the AEAT the tool « Differentiated sectors calculator » is available, which, in If you carry out more than one activity, it allows you to determine whether they constitute distinct sectors for VAT purposes.

The Tax Administration may authorize the application of a common deduction regime to certain differentiated sectors of activity. This regime will apply as long as said authorization is not revoked or renounced by the taxable person. Furthermore, the authorization will not take effect in the year in which the total amount of the deductible contributions by applying the common deduction regime exceeds by 20 percent that which would result from independently applying the deduction regime with respect to each differentiated sector.

The request for the application of a common deduction regime for the differentiated sectors must be made within the following deadlines:

  • In the month of November of the year prior to that in which it takes effect. In this case, the common percentage applies only to the fees paid as of January 1 of the year following the year in which the request was made.

  • In cases where activities begin, the request can be made at any time, until the end of the month following the month in which the usual delivery of goods or services corresponding to the activity begins. In this case, the common percentage applies only to the contributions paid from the date on which said start occurs.

This request is submitted to the competent body of the Tax Agency and is deemed to have been granted once one month has elapsed (counted from when it has been entered in the registry of the body competent for its processing) without notification of its resolution.