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V2264-16 24 May 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · derecho a la deducción

VAT cannot be deducted if a final resolution denies the deductibility of acquired goods

A company inquired whether it could deduct VAT on land and a building following a verification procedure, provided they were used for its business activities. The DGT ruled that if a final administrative resolution denies deductibility due to a failure to prove intended use in taxable activities, such VAT cannot be deducted at a later date.

The question raised

The consultant asks whether, once the verification procedure is completed, if the land and the construction are allocated to the exercise of business or professional activities, the right to deduct the tax amounts corresponding to the land and the construction is preserved from that fiscal year onwards, or if such right must be considered expired.

The DGT's ruling

If in a verification procedure the taxable person fails to prove that the assets were acquired with the intention of allocating them to taxable and non-exempt operations, and the resolution denying such deductibility becomes final, the tax amounts may not be deducted in subsequent tax returns. The right to deduction expires according to the time limits set forth in Article 99 of the VAT Law, unless there is a final resolution or judgment pending the resolution of a dispute.

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