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V2198-14 7 August 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeto pasivo

VAT on activity-related expenses may be deductible even after cessation of business

A query was raised regarding whether a liquidated company may exercise the right to VAT deduction. The DGT ruled that the cessation of activity does not automatically terminate taxable person status if there are expenses directly related to the liquidation of the business.

The question raised

Treatment of the operation for tax purposes and, in particular, with respect to the exercise of the right to deduction.

The DGT's ruling

The status of taxable person is not lost by the mere cessation of activity if expenses directly related to said activity are incurred. This allows for the deduction of the amounts incurred, provided that the legal requirements are met and there is no intention of fraud or abuse. The loss of the status of entrepreneur does not occur until the effective cessation and deregistration from the census take place.

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