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VAT practical manual 2022.

General rule

Both taxes tax the transfer of assets or rights. VAT is applied when the transferor is a businessman or professional, and the concept "Onerous Asset Transfers" is applied when the transferor is an individual.

Example:

A second-hand car purchased from a dealer will be taxed by VAT that the dealer must pass on to the buyer. On the other hand, if the purchase is made from a private individual, the tax that the purchaser must pay is the Tax on Property Transfers and Documented Legal Acts.

A fundamental difference between both taxes is the possibility of deducting VAT when it is borne by a businessman. While the amounts paid for the concept "Onerous Asset Transfers" constitute a cost for the businessman, VAT is not, since it can be deducted in the corresponding self-assessment.

As a general rule, the incompatibility of both taxes occurs so that, in principle, the operations carried out by businessmen and professionals in the exercise of their business or professional activity will not be subject to the concept "Onerous Asset Transfers" of the Tax on Asset Transfers and Documented Legal Acts, but VAT.