- The Central Economic-Administrative Court (TEAC) issued a resolution on the deductibility of input VAT on the costs of supplies such as water, electricity, or gas related to a property that is partially affected by the economic activity of a taxable person.
- The Spanish VAT Law limits the right to deduct input VAT payments, stating that taxpayers may not deduct borne tax amounts that do not directly and exclusively affect their business or professional activity.
- However, there are exceptions, such as the acquisition of investment goods, where a partial deduction is admissible depending on the degree of impact on the economic or professional activity of the taxable person. Spanish regulations provide for the possibility of partial deduction of input VAT on the acquisition of goods and services only when they are linked to a specific investment good, which is motor vehicles.
- This seems to conflict with the Community Tax Directive, which does not provide for limitations on the right to deduction in the same terms as the Spanish legislator.
- The TEAC points out that decision-making bodies are obliged to interpret domestic law in accordance with the purpose of community regulations.
Source Legaltoday
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