In Spain, recovering VAT is a right of the taxpayer and not a tax option

The Central Economic Administrative Court has established that the recovery of input VAT is a right of the taxpayer and not a tax option.

Traditionally, the Tax Authorities and the Central Economic-Administrative Court considered that the right to recover input VAT was optional and, therefore, input VAT could not be recovered in a VAT return whose filing deadline had passed. Instead, the Tax Authorities were considering that the relevant input VAT had to be reclaimed in subsequent VAT periods, with the limit of four years as from when the input VAT became recoverable.

The Central Economic Administrative Court recently judged on a case where a taxpayer amended its previous VAT returns by offsetting additional input VAT (that they had not considered as deductible in the first return filed) and reclaiming the corresponding VAT credit.

Based on the Spanish Supreme Court case law, the Central Economic Administrative Court held that input VAT recovery was not optional and that it was a right of the taxpayer. Consequently, this right should be exercised even in cases where tax returns are submitted out of their filing deadline.

Key takeaway

This resolution which adopts a more flexible position qualifies as doctrine and is binding for the Tax Authorities. Taxpayers may now reconsider how they want to reclaim input VAT for previous periods.

Reference: Doctrina - TEAC - 00/06065/2021/00/00 - 24/10/2023