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V1904-23 3 July 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción de cuotas

Deductibility of VAT depends on whether results are granted free of charge or commercially exploited

A public enterprise asks whether it can deduct VAT on R&D services whose outputs (prototypes and intellectual property rights) will be granted free of charge to public bodies or may be commercially exploited. The DGT responds that deductibility depends on the use of the outputs and whether the entity carries out subject or non-subject operations.

The question raised

Deductibility of Value Added Tax amounts incurred by the applicant in the research and development services subject to contract.

The DGT's ruling

The free transfer of prototypes to Public Administrations is not subject to VAT. If the entity carries out both taxable operations (commercial exploitation) and non-taxable operations (free transfers), it may apply a reasonable and homogeneous criterion for the imputation of tax amounts. Tax amounts for goods intended exclusively for non-taxable operations are not deductible. Likewise, it is possible to deduct tax amounts incurred prior to the commencement of commercial exploitation if there is an intention to use them in said activity.

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