Provisional deduction percentage

For the purposes of deductions in the VATof the quotas supported or paid prior to the start of the delivery of goods or provision of services corresponding to business or professional activities, those who were not previously carrying out business or professional activities and acquire the status of businessman or professional by making purchases or imports of goods or services with the intention, confirmed by objective elements, of using them to carry out activities of such nature, may deduct the quotas of VATthat, on the occasion of said operations, they support or pay before the moment in which they begin the habitual performance of the delivery of goods or provision of services corresponding to said activities, in accordance with the provisions of articles 111, 112 and 113 of Law 37/1992, of VAT.

To this end, must be able to prove the objective elements that confirm that at the time they made said acquisitions or imports they had that intention, and such proof may be required by the tax authorities.

Accreditation may be carried out by any of the means of proof admitted by law .

Among other circumstances, compliance with the formal, registration and accounting obligations required by the regulations governing Value Added Tax, the Commercial Code or any other regulation applicable to those who have the status of entrepreneurs or professionals may be taken into account.

In this regard, particular account will be taken of compliance with the obligation to submit the census declaration in which the Administration must be notified of the start of business or professional activities by purchasing or importing goods or services with the intention of using them to carry out such activities. (Box 111 “Registration in the census of entrepreneurs, professionals and withholding agents” and box 504 “Notification of start of activity. Deliveries of goods or provision of services after the acquisition of goods or services”)

The above will also apply to those who, already having the status of entrepreneur or professional by carrying out activities of such nature, start a new business or professional activity that constitutes a differentiated sector (see definition in the subsection “ Differentiated sectors and special apportionment ”) with respect to the activities they were previously carrying out. (Box 131 Modification of data relating to Value Added Tax and box 506 Communication of the start of a new activity that constitutes a differentiated sector with the start of deliveries of goods or provision of services after the acquisition of goods or services intended for the development of the same.)

The deductions referred to in the preceding paragraphs will be applied by applying the percentage proposed or requested in the census declaration by the businessperson or professional to Administration (box 586 “Proposes provisional deduction percentage, for the purposes of article 111.two of the LIVA ”), except in the case where the latter sets a different one taking into account the characteristics of the corresponding business or professional activities. This request will not be necessary when all the operations to be carried out generate the right to deduct the VATincurred.

Such deductions shall be considered provisional and shall be subject to the adjustments provided for in Articles 112 and 113 of Law 37/1992.

The proposal will be made by the entrepreneur or professional based on the deliveries of goods or services that give rise to the right to the deduction and other operations of a similar nature that do not enable the exercise of said right, which he or she plans to carry out in the exercise of his or her business or professional activity (for example, if all the deliveries or services to be made give rise to the right to deduction, the percentage would be 100%; if he or she foresees that only 60% would give rise to such a right, the percentage would be 60%, and if no delivery or service gives rise to such a right, the percentage would be 0%).

Business owners who, pursuant to the provisions of Law 37/1992, must be subject to the special regime of the equivalence surcharge from the start of their commercial activity, may not make deductions from the fees incurred or paid prior to the start of the delivery of goods or provision of services corresponding to business or professional activities, in relation to the activities included in said regime (box 514 “Special regime for equivalence surcharge, registration”)

Businessmen or professionals who have made deductions from the contributions incurred or paid prior to the start of the delivery of goods or provision of services corresponding to business or professional activities will not be able to benefit from the special regime for agriculture, livestock and fishing (box 534 “Special regime for agriculture, livestock and fishing”) for activities in which they use the goods and services for whose acquisition they have incurred or paid the contributions subject to deduction until the end of the third calendar year of the delivery of goods or provision of services carried out in the development of said activities. This will have the same effects as the waiver of the aforementioned special regime (box 542 “Special regime for agriculture, livestock and fishing”).

first year of delivery of goods or provision of services in the development of business or professional activities will be considered to be the during which the business person or professional begins the regular exercise of said operations, provided that the start of said operations takes place before July 1 and, otherwise, the following year.