Skip to main content
Practical Handbook VAT 2021

Special pro rata

Applies:

  1. At the discretion of the taxpater. This decision is made in the following terms and ways:

    • During the final self-assessment for the tax corresponding to each calendar year, proceeding in this case with the correction of the deductions made during the year.

    • As regards the start of activities by means of the corresponding census tax return, before the end of the period for filing the self-assessment corresponding to the period in which the normal supply of goods or services for the activity starts.

      The option remains effective until it is revoked, although it shall be valid for at least three calendar years, including the calendar year in which the option is exercised.

      The revocation may be made during the final self-assessment of the year, in which case the deductions made during the year will be corrected.

  2. Mandatorily when applying the general pro rata the deduction exceeds by 10 per cent the deduction that would result from applying the special pro rata.

  3. Mandatory for entities that have exercised the option for the advanced level of the Special system for groups of companies in relation to VAT concerning the different sectors of intra-Group operations, as established in Article 63 bis.3 of VAT Regulation.

Calculation of deductible input VAT:

  1. Amounts paid for goods or services used exclusively in transactions eligible for deduction are deducted in full.

  2. Amounts paid for goods or services used exclusively in transactions not eligible for deduction cannot be deducted.

  3. Amounts paid for goods or services used only in part of the transactions eligible for deduction are deducted at the general pro rata percentage.

Example calculation as regards the definitive deduction percentage:

As regards premises and home rental activities, the decision has been taken to apply the special pro rata.The activities performed in year "n" were as follows:

  • Home rental (without right to deduction):20,000 euros
  • Premises rental (with right to deduction):25,000 euros

The input VAT during "n" can be broken down as follows:

  • Input VAT on premises rental:800 euros
  • Input VAT on home rental:320 euros
  • Input VAT on services commonly used in both activities:160 euros

Deductible input VAT:

  1. In transactions without the right to deduction0 euros

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

  3. Amount deductible for simultaneous use services in both activities:

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

    Rounded up = 56%.

    160 x 56% = 89.60 euros

    Total input VAT deductible:889.60 euros