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V0814-20 13 April 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · régimen especial de bienes usados

Tax base shall be zero if there is a negative profit margin under the special scheme for second-hand goods

A boat trading company enquired how to determine the VAT taxable amount when the selling price is lower than the purchase price. The DGT ruled that, in the event of a negative margin, both the tax base and the tax liability shall be zero.

The question raised

In the event that a transaction has a negative margin, that is, the sale price of the vessel is lower than the price at which the reseller purchased it, the determination of the amount of the Value Added Tax taxable base in the aforementioned sale.

The DGT's ruling

Under the special scheme for second-hand goods, if the profit margin is negative, the taxable amount of the transaction shall be zero. As there are no provisions for negative margins, these may not reduce positive margins from other transactions nor allow for deductions. Therefore, the VAT amount corresponding to said transaction shall also be zero.

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