- A recent court decision in Spain has led to a change in VAT rules that benefits home workers.
- Previously, VAT could only be deducted on goods and services used exclusively for business or professional activities.
- However, an exception was made for capital goods, such as motor vehicles, where a partial deduction was allowed depending on the degree of use for business purposes.
- The Spanish VAT Law did not allow for partial deduction on expenses related to immovable property used for both business and private purposes.
- However, a recent decision by a Spanish Administrative Court stated that this limitation does not comply with EU VAT regulations and that VAT deduction on such supplies must be made in proportion to their use for business activities.
- This decision will have a significant impact on many taxable persons, particularly with the increase in remote working and home offices.
Source International Tax Review
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