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V5386-16 21 December 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · iva soportado

Non-deductible VAT treated as an expense or increased acquisition cost for Personal Income Tax

A taxpayer with VAT-exempt activities has enquired about the treatment of VAT on purchases for Personal Income Tax purposes. The Directorate General for Taxes (DGT) has ruled that such VAT should be recorded either as an expense or as part of the increased acquisition cost of the assets.

The question raised

Treatment in Personal Income Tax (IRPF) of input VAT without the right to deduction.

The DGT's ruling

Non-deductible VAT amounts receive the same treatment as the acquisition of the goods or services that give rise to them. Input VAT shall be a deductible expense or an increase in the acquisition cost, except in the case of fixed assets. In the case of fixed assets, non-deductible VAT increases the value of the asset and affects depreciation.

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