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V0213-21 10 February 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · cash-pooling

Cash-pooling activities of a mixed holding company may be deemed ancillary and excluded from the deduction pro rata

A mixed holding company sought clarification on whether its participation in a cash-pooling system constituted an economic activity and whether the resulting financial returns should be included in its VAT deduction pro rata. The DGT ruled that the transfer of surplus funds is an economic activity subject to VAT; however, as the operation requires very limited resources, it is considered ancillary.

The question raised

1. Whether the consulting holding company carries out an economic activity for the purposes of Value Added Tax.

The DGT's ruling

The transfer of cash surpluses in a cash-pooling system in exchange for consideration is a loan operation subject to and exempt from VAT. Although it constitutes an economic activity as it involves making capital available for commercial purposes, it must be considered an ancillary or non-habitual operation if it involves a very limited use of goods or services. In this case, as it is managed through automated and computerised processes, it should not be included in the calculation of the deduction pro rata.

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