Self-employed individuals may deduct VAT amounts eliminated in final assessments

The possibility of recovering VAT amounts that have been rejected by the Tax Administration in a final assessment has been clarified by the Directorate General of Taxes (DGT). The debate centered on whether the loss of a deduction in an inspection or a definitive assessment nullified the possibility of applying it in the future.

What the DGT has resolved

The DGT has determined that the elimination of deductions due to lack of accreditation in a final assessment does not extinguish the right to deduct the amounts incurred. This criterion is based on the fact that VAT deduction is not a discretionary tax option, but a right held by the taxable person.

Therefore, this right can be exercised both in the period in which the accrual occurred and in successive periods. The only temporal limit is the four-year statute of limitations, which begins to be calculated from the birth of the right (the accrual of the amount), unless there is an administrative or judicial controversy that suspends said calculation.

What this means for you

For self-employed professionals carrying out business activities, this resolution offers a way to recover the tax incurred that could not be deducted at the time due to accreditation errors or inspections that resulted in a final assessment. If a VAT amount could not be deducted in 2023 due to an assessment by the Administration, the taxpayer maintains the ability to apply it in subsequent self-assessments, provided it is within the four-year margin from when the taxable event occurred.

What should be done

In a situation involving VAT amounts not deducted due to decisions by the Administration, it is necessary to verify the exact date of the accrual of said amounts to ensure that the right has not expired. The documentation accrediting the right to deduction must be evaluated to avoid new rejections, and it should be analyzed whether exercising the right in successive periods is the most appropriate technical route for the specific tax situation of the activity.