Spanish Supreme Court: Cost-Plus Refactoring Still Qualifies as VAT-Subject Consideration

The Spanish Supreme Court ruled that VAT deduction is not denied merely because costs are refactured at exact cost with no profit margin; a direct consideration/contraprestation is enough to make the transaction “onerous.”
In the Porcelanosa A.I.E. case, the Court annulled the VAT assessment that had disallowed input VAT deductions on expenses later recharged to members at cost.
The Court relied on CJEU case law and the VAT neutrality principle, rejecting the idea that onerosity requires an economic gain or margin.
The AEAT had argued the input VAT was non-deductible because the expenses related to client hospitality and similar excluded items under Article 96 LIVA, but that position was overturned on the onerosity issue.
The Court did not set binding jurisprudence because the State Attorney accepted the taxpayer’s position and did not fully contest the issue.

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.