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V2555-14 30 September 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IVA · actividad empresarial

Input VAT is deductible if used in taxable and non-exempt activities

A public research consortium has queried whether it can deduct VAT on its main and auxiliary activities. The DGT has ruled that research constitutes a business activity and that VAT is deductible provided that goods and services are used for taxable and non-exempt transactions.

The question raised

1) Whether the VAT input tax incurred in both the main activity and the auxiliary activities carried out by the requesting entity is tax deductible.

The DGT's ruling

Research, both basic and applied, is of a business nature. The right to VAT deduction depends on the foreseeable use of the goods and services; input tax may be deducted for the main activity and its ancillary activities, provided that taxable and non-exempt transactions are carried out. Input tax corresponding to non-taxable activities shall not be deductible.

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