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Practical Handbook VAT 2022

Frequently asked questions raised in this chapter

1.If an invoice is received two years after the purchase, should the deductible VAT be declared in the following self-assessment or should a correction be made to the declaration for the period in which the goods were purchased?

VAT shall be deducted in the settlement period in which the invoice is received, or in the following settlement periods, as the taxable person must be in possession of the invoice in order to exercise the right to deduct.In any case, it should be borne in mind that the right to deduct expires four years after the right to deduct has arisen.

However, if the entity has been declared bankrupt and the invoice corresponds to VAT paid prior to the declaration of bankruptcy, the deductible VAT must be included in the self-assessment corresponding to the period in which it was paid.

2.Should advances received from customers be taken into account in calculating the deduction percentage?

Yes, for the calculation of the pro-rata percentage, advance payments must be taken into account in the year in which they are received and the tax accrues.

3.Can the VAT incurred by a businessman on the purchase of gifts for his main customers be deducted?

No, input VAT on goods for customer services is not deductible.

4.A businessman buys a computer for 1,000 euros.Does the deduction taken in the first year have to be regularised for the following four years?

No, you do not have to regularise the deduction made as it is not considered an investment good as its value is less than 3,005.06 euros.

5.Does a public deed count as an invoice in order to be able to deduct input VAT?

The deduction of tax on transactions carried out by entrepreneurs and professionals must be justified by means of a full invoice issued by the entrepreneur or professional who carried out the transaction.However, if all the requirements set out in article 6 of the Regulation governing invoicing obligations approved by Royal Decree 1619/2012, of 30 November, have been included in the deed of sale, it may be used as proof of entitlement to the deduction (DGT - Consultation V2433-08).

6.Should a generic subsidy received by an employer be taken into account in calculating the rate of deduction?

No, since 1 January 2006 subsidies of any kind received by taxable persons do not limit the right to deduct.Only subsidies that constitute the total or partial consideration for taxable transactions and those linked to the price are included in the calculation of the pro rata, both in the numerator and in the denominator depending on whether or not they form part of the tax base of transactions that give rise to the right to deduct, and those that are linked to the price.

7.Can input VAT be deducted on the purchase of a car by a businessman who uses it for business purposes and also for private journeys?

Yes, it is partially deductible in the part affected to the activity.There is a legal presumption of 50 per cent involvement in the activity, so that if a different percentage is to be deducted, the taxpayer or the administration must prove a greater or lesser involvement in the activity, respectively.

8.What if it is purchased by a taxi driver for passenger transport?

In this case, it is presumed to be 100 per cent allocated, in principle being deductible in its entirety, without prejudice to the Administration being able to demonstrate a lower allocation.