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V3131-20 20 October 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · derecho a la deducción

VAT deduction on photovoltaic maintenance costs is possible when selling electricity

An educational centre selling electricity via a photovoltaic installation has enquired whether it can deduct VAT on the maintenance costs of said installation. The DGT has ruled that the sale of electricity is a taxable activity and not an exempt one, thereby allowing for the deduction of related expenses.

The question raised

Question posed: Possibility of deducting Value Added Tax amounts incurred as a consequence of the maintenance and repair of elements attributable to the electricity sales activity.

The DGT's ruling

The sale of electricity is considered a supply of goods subject to VAT and does not fall under the exemption for educational activities. The right to deduction arises provided that the goods and services are used in transactions that are subject to VAT and not exempt. Since teaching is exempt and the sale of electricity has a deduction rate of 100%, both constitute distinct sectors. Therefore, the deduction regime must be applied independently for each sector.

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