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Practical Handbook VAT 2022

Deductions in separate sectors of the business or professional activit

The system of deductions for each different sector of the business or professional activity is applied separately to each sector.

For goods or services used in several different sectors, the general pro-rata is applied to calculate the applicable deduction percentage.For the purposes of calculating this percentage, transactions included in the special regimes for agriculture, livestock and fisheries or the equivalence surcharge are not considered as giving rise to the right to deduct.

The tool "Differentiated sectors calculator" is available on the AEAT e-Office at . If you carry out more than one activity, it allows you to determine whether they constitute differentiated sectors for the purposes of VAT.

The tax administration may authorise the application of a common deduction scheme to certain different sectors of activity.This scheme shall apply for as long as this authorisation is not revoked or waived by the taxpayer.Furthermore, the authorisation shall not take effect in the year in which the total amount of tax deductible under the common deduction scheme exceeds 20 per cent of that which would result from the independent application of the deduction scheme in respect of each separate sector.

The request for the application of a common deduction scheme for the different sectors must be made before the following deadlines:

  • In November of the year preceding the year in which it takes effect.In this case, the common percentage applies only to input tax from 1 January of the year following the year in which the application was made.

  • In cases when activities have been started, the application may be made at any time up to the end of the month following the month in which the usual supply of goods or services corresponding to the activity starts.In this case, the common percentage applies only to the input tax from the date on which these activities start.

This application is submitted before the competent body of the Tax Agency and is understood to have been granted after one month has elapsed (effective the date on which the application was included in the records of the body responsible for processing it) without a resolution having been communicated.