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VAT practical manual 2021.

Deductions in separate sectors of the business or professional activit

The deduction regime for each distinct sector of business or professional activity is applied independently for each sector.

In the case of goods or services used in several different sectors, the general apportionment is applied to determine the applicable deduction percentage. For the calculation of this percentage, it is considered that the operations included in the special regimes of agriculture, livestock and fishing or the equivalence surcharge do not give rise to the right to deduct.

On the website of the AEAT the tool « Differentiated sectors calculator » is available, which, in If you carry out more than one activity, it allows you to determine whether they constitute distinct sectors for VAT purposes.

The Tax Authority may authorize the application of a common deduction regime to certain differentiated sectors of activity. This regime will apply as long as said authorization is not revoked or renounced by the taxpayer. Furthermore, the authorisation will not take effect in the year in which the total amount of deductible contributions by application of the common deduction regime exceeds by 20 percent the amount that would result from independently applying the deduction regime with respect to each differentiated sector.

The application for the application of a common deduction regime for the differentiated sectors must be made within the following deadlines:

  • In the month of November of the year prior to the year in which it takes effect. In this case, the common percentage applies only to the contributions incurred from 1 January of the year following the year in which the application was made.

  • In the case of starting activities, the application may be made at any time, until the end of the month following the month in which the regular delivery of goods or provision of services corresponding to the activity begins. In this case, the common percentage applies only to the contributions incurred from the date on which said commencement occurs.

This application is submitted to the competent body of the Tax Agency and is deemed to be granted once one month has passed (counted from when it was entered into the registry of the competent body for processing) without its resolution having been notified.