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V0899-22 28 April 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Foundation must charge VAT on investment but cannot deduct it if its prorata is 0%

A foundation hires an Italian entrepreneur for a lighting project and asks whether it must charge VAT and whether it can deduct it. The DGT responds that the investment of the passive party must apply, and deductibility will depend on its prorata, which will be 0% if no taxable operations were carried out in the year.

The question raised

Whether the consultant must charge the corresponding Value Added Tax on the services received and whether the same may be subject to deduction.

The DGT's ruling

The foundation is a taxable person under the reverse charge mechanism upon receiving services from a taxable person not established in Spain. The right to deduction is conditional upon compliance with the requirements of the VAT Act and the application of the pro rata rule. If, during the fiscal year, no operations were carried out that generate a right to deduction, the pro rata will be 0% and there will be no right to deduct the input tax.

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