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V0518-19 12 March 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prorrata

Application of allocation criteria and pro rata rules for dual entities with VAT-subject and VAT-exempt activities

A public body carries out both VAT-subject and VAT-exempt activities. The DGT clarifies how VAT incurred should be deducted based on the use of goods and services.

The question raised

Application of the pro rata rule for Value Added Tax deduction and the manner in which the deduction of the tax paid must be carried out.

The DGT's ruling

Public entities performing activities that are both taxable and non-taxable may deduct the amounts paid for goods and services intended for both through a reasonable and homogeneous imputation criterion. Amounts intended exclusively for operations not subject to tax under Article 7.8 are not deductible. For activities that generate a right to deduction and those that do not, the rule of pro rata (general or special) must be applied, and the existence of differentiated sectors must be considered.

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