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VAT practical manual 2021.

Who can make the deduction

They can only deduce the VAT those who meet the following subjective requirements:

  1. Have the status of businessmen or professionals.

  2. Having started the regular performance of deliveries of goods or provision of services corresponding to their business or professional activities.

However, the deduction of the fees incurred or paid before the start of the usual performance of the deliveries of goods or provision of services specific to the activity is permitted.

Taxpayers who jointly carry out taxable and non-taxable operations in accordance with the provisions of article 7.8 of the Law of VAT in relation to the public entities, may deduct the quotas supported by the acquisition of goods and services destined simultaneously to the realization of one and the other based on a reasonable and homogeneous criterion of imputation of the quotas corresponding to the goods and services used for the development of the operations subject to the tax (or not subject because they are carried out outside the territory of application of the tax that would give rise to the right to deduction if they had been carried out in the same).

For these purposes, a reasonable and homogeneous imputation criterion of the quotas corresponding to goods and services destined simultaneously to both types of operations may be the proportion that represents in each calendar year the total amount, excluding the VAT, from the delivery of goods and provision of services of operations subject to tax, with respect to the total income obtained by the taxpayer from all of his activity.

Obviously, the quotas supported by the acquisitions or imports of goods or services intended exclusively to carry out operations not subject to article 7.8 of the Law of the VAT.

Likewise, the general deductibility criteria will apply and, where applicable, the prorated rule will apply.

The provisions of this section shall not apply to public service management activities under the conditions set out in letter a) of article 78.Two.3 of the Law of VAT.