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V1726-19 9 July 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción

Cannot deduct VAT if no economic activity, only holding of assets

A limited liability company asks whether it can deduct VAT on its expenses. The DGT responds that, without carrying out any economic or professional activity and merely holding assets, it has no right to deduction.

The question raised

Whether the deduction of the amounts paid for input VAT is permissible.

The DGT's ruling

To deduct input VAT, it is necessary to hold the status of entrepreneur or professional and to use the goods or services in activities included in Article 94 of Law 37/1992. If the company does not carry out economic activity and only holds assets, it does not hold the status of entrepreneur or taxable person, and therefore must bear the tax as a final consumer without the right to deduction.

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