Companies may apply differentiated activity sectors if they meet two requirements

Managing the deductibility of Value Added Tax (IVA) requires the correct attribution of input tax to the activities carried out by an entity. In this context, the Directorate General of Taxes (DGT) has specified the conditions under which a company can establish differentiated activity sectors to avoid the application of a single pro rata.

What the DGT has resolved

For a new activity to constitute a differentiated activity sector for VAT purposes, two conditions must mandatory be met:

• CNAE Classification: Activities must belong to different groups of the National Classification of Economic Activities (CNAE), specifically in its three-digit breakdown.
• Difference in deductibility: The deduction percentages of both activities must differ by more than 50 percentage points.

If both requirements are met, the entity must apply the deduction regime and the pro rata separately for each sector. In the event that there are goods or services for common use affecting both sectors, the provisions of Article 104 of the IVA Law shall apply.

What this means for you

This criterion directly impacts entities that carry out activities with different deduction regimes. If your company operates in fields with diverse economic natures, the correct segmentation of sectors can allow for more precise management of input tax. However, separation is not discretionary; it requires that the difference in deduction capacity be significant (exceeding 50 points) and that the technical classification of the activity be different.

What should be done

It is necessary to perform a technical analysis of the entity's economic activity to verify whether it complies with the three-digit breakdown of the CNAE. Likewise, it must be checked whether the difference between the deduction percentages of current activities exceeds the 50 percentage point threshold established by the administration. The correct application of these criteria avoids errors in determining the pro rata and ensures deductibility in accordance with current regulations.