The rule of VAT pro rata It is applied in those businesses in which the taxable person is simultaneously carrying out activities subject to VAT and activities that are not subject to or exempt. This rule aims to ensure that the percentage of deductible VAT corresponds with the percentage of income subject to the tax with respect to those not subject.
In this sense, The legislation allows only those activities that are effectively subject to VAT to have the right to deduction., leaving out the exempt ones, with respect to the total operations carried out by the taxable person. There are two methods for its calculation: the general proportion rule and the special proportion rule.
General pro rata rule
The calculation of the general proportion is obtained dividing the total of the operations that give rise to the right to deduction of the fees borne and the total operations carried out by the businessman.
In each of the quarterly settlements, a provisional prorata will be applied which will be calculated based on the previous year. The final calculation will be made at the end of the year, where the pro rata of all settlements will be offset with the definitively corresponding one.
Special pro rata rule
While the general pro rata introduced all acquisitions of goods and services carried out by the businessman in the calculation and applied the corresponding deductibility percentage, the special pro rata requires the separation of the operations carried out by the business into three very different groups:
- The operations whose quotas are fully deductible.
- The operations whose quotas are partly deductible, where a percentage will have to be applied to calculate the deductible amount.
- The operations whose fees are not deductible.
The special proportion may be applied voluntarily at the request of the taxable person, or on a mandatory basis when there is a positive difference of 20 percentage points between the general proportion and the special proportion.
Source: https://www.pymesyautonomos.com
