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Exempt Activities: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Settled doctrine High confidence 13 rulings · 2014–2024

Current position

A professional performing exempt activities is not entitled to VAT (IVA) deduction, unless they simultaneously carry out other taxable operations. In this case, the deduction is determined by applying a pro rata or by division into differentiated sectors. For investment goods, the deduction shall be partial depending on their use in the various activities. Regarding Personal Income Tax (IRPF), the deductibility of expenses depends on their correlation with income and their direct use in the economic activity.

The DGT's position remains constant in the application of deduction rules for mixed activities. Throughout the rulings, it is confirmed that the existence of exempt activities prevents total deduction and requires the use of a pro rata or differentiated sectors. No changes in criterion are observed, but rather the repeated application of the regulations on use and proportionality.

Analysis based on 13 of 13 rulings with a stated position. Updated 27 September 2026.

Rulings on this topic

13
V2075-21 12 Jul 2021

VAT and IRPF deductions depend on exclusive allocation to professional activity

SG de Impuestos sobre la Renta de las Personas Físicas
sectores diferenciados de actividadprincipio de correlacióngastos de manutenciónactividades exentasdeducción de cuotas LIRPF — Ley 35/2006 del IRPF art. 28.1LIRPF — Ley 35/2006 del IRPF art. 30.2.c
Affects CompanyExpat · Non-residentIndividual
V1468-21 19 May 2021

Application of passive investment requires buyer to have deduction right

SG de Impuestos sobre el Consumo
inversión del sujeto pasivorenuncia a la exenciónderecho a la deducciónempresario o profesionalactividades exentas LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 4.2
Affects CompanyExpat · Non-residentIndividual
V4324-16 6 Oct 2016

Children's camps subject to reduced VAT rate of 10%

SG de Impuestos sobre el Consumo
prestación únicatipo reducidoregla de la prorrataactividades exentassectores diferenciados LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 5
Affects CompanyExpat · Non-residentIndividual

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