Medical transport companies will sell their ambulances with VAT subject and exempt

The nature of the sale operation of medical transport vehicles raises doubts regarding the applicable tax rate, especially when the entity's main activity is subject to exemptions in Value Added Tax (IVA).

What the DGT has resolved

The Directorate General of Taxes (DGT) has determined that the supply of goods is subject to the tax as long as the entity holds the status of a business owner. In the specific case of the transfer of vehicles that have been used in exempt operations, the tax treatment will depend on the deduction status at the time of acquisition.

The criterion establishes that the transfer of ambulances will be subject and exempt from VAT if the taxable person was not granted the right to deduction, whether total or partial, of the tax incurred when they acquired said vehicles. Conversely, if the entity was able to exercise the right to deduction upon purchase, the supply of the vehicles must be taxed applying the general tax rate of 21 percent.

What it means for you

For medical transport companies, this criterion defines the tax burden at the time of renewing their fleet or selling used assets. The determining factor is not the type of vehicle, but the deduction capacity that the company exercised when acquiring the ambulance.

• If the company could not deduct the VAT upon purchase due to performing exempt activities, the sale will be subject and exempt.
• If the company did deduct part or all of the VAT during acquisition, the sale of the ambulance is subject to the general rate of 21%.

What should be done

It is necessary to perform an analysis of the fiscal traceability of each vehicle in the fleet. The VAT declaration made at the time of acquisition of each unit must be verified to determine whether the deduction was applied or if it proceeded to an allocation to exempt operations without the right to deduction. This record is fundamental to apply the correct treatment in sales invoices and to avoid contingencies with the Administration.