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VAT practical manual 2021.

Special pro rata

Applies:

  1. By option of the taxpayer. This option is carried out in the following terms and forms :

    • In the last tax self-assessment corresponding to each calendar year, , proceeding in such case to regularize the deductions made during the same.

    • In cases of commencement of activities through the corresponding census declaration, until the end of the deadline for submitting the self-assessment corresponding to the period in which the usual delivery of goods begins. goods or services specific to the activity.

      The option takes effect as long as it is not revoked , although it will be valid for a minimum of three calendar years, including the calendar year to which the option exercised refers.

      The revocation may be carried out in the last self-assessment of the year, proceeding in such case to the regularization of the deductions made in the same year.

  2. Mandatory when applying the general pro rata the deduction exceeds by 10 percent that which would result from applying the special pro rata.

  3. Mandatory by the entities that have exercised the option for the advanced level of the Special Regime of the group of entities of the VAT in relation to the differentiated sector of the intragroup operations, as established in article 63 bis.3 of RIVA .

Calculation of VAT deductible input:

  1. Fees incurred on goods or services used exclusively in operations with the right to deduct are deducted in full.

  2. Fees incurred on goods or services used exclusively in operations without the right to deduct cannot be deducted.

  3. Fees incurred on goods or services used only in part in operations with the right to deduct are deducted as a percentage of the general proportion.

Example of calculating the final percentage of deduction:

In an activity of renting premises and homes, it has been decided to apply the special pro rata. The activities carried out in year “n” have been:

  • Home rental (without right to deduction): 20,000 euros
  • Rental of premises (with the right to deduction): 25,000 euros

The VAT borne during “n” has the following breakdown:

  • Input VAT on premises rental: 800 euros
  • Input VAT on housing rentals: 320 euros
  • Supported VAT on services of common use in both activities: 160 euros

Deductible input VAT:

  1. In operations without the right to deduction: 0 euros

  2. In operations with the right to deduction: 800 euros

  3. Deductible fees for services used simultaneously in both activities:

    [25,000 ÷ (20,000 + 25,000)] x 100 = 55.5555%

    Rounded up = 56%

    160 x 56% = 89.60 euros

    Total deductible input VAT: 889.60 euros