Deducting higher VAT payments in a supplementary return is not an option, it is a right according to the Spanish Supreme Court
Javier Ortega
by Javier Ortega
In a recent ruling of the Supreme Court (STS 645/2023, 23 February 2023), the Spanish Court of Justice ruled on whether it is a right or an option of the taxpayer regarding the rectification of a supplementary VAT self-assessment submitted by a sports club, in which a higher amount of deductible VAT is recorded and, therefore, a refund of undue income is requested.
Article 99.3 of the VAT law provides that taxable persons may deduct VAT payments accrued, and this article specifies the periods in which this deduction may be exercised.
The right to deduction may only be exercised in a tax return-settlement relating to the settlement period in which the holder has borne the deductible contributions, or in those of successive periods, provided that a period of four years has not elapsed from the date on which the right to deduction arose.
As the aforementioned article indicates, a taxable person deciding to deduct input VAT is not exercising an option; on the contrary, they are exercising a right. They may exercise that right in a self-assessment, in which they should deduct those instalments; or in subsequent self-assessments, provided that no more than four years have elapsed since the right arose.
In the case of the abovementioned decision, the sports club was not faced with a deduction deriving from the very mechanics of the operation of the tax for which it could have applied Article 99.3 of the VAT law, but with a rectification of complementary self-assessments in which the taxable person was compelled to include higher input VAT payments in order to adapt to the criterion followed by the tax authorities in a previous inspection procedure.
The taxpayer considered that this was detrimental to its legitimate interests, and instead of resorting to Article 99.3 of the VAT law, they opted to appeal to Article 120.3 of the General Tax Law, which states that: “When a taxpayer considers that a self-assessment has harmed his legitimate interests in any way, he may request the rectification of the self-assessment in accordance with the procedure to be regulated by law".
Therefore, the submission of supplementary self-assessments modifying the initial deduction of deductible VAT cannot be qualified as an option, but as the exercise of the right to deduct input VAT.
The Supreme Court has thus ruled that the rectification of supplementary VAT self-assessments, with the refund of the amounts unduly paid plus the corresponding interest for late payment, is admissible.
GGI member firmRuiz Ballesteros Lawyers and Tax AdvisorsMarbella, SpainT: +34 952 77 98 74
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Ruiz Ballesteros Lawyers and Tax Advisors is a firm of lawyers, economists and tax advisors established over 15 years ago. Highly qualified professionals cover all areas of legal, tax, accounting and commercial requirements for clients. Continuous training, demonstrating excellence, taking care of every detail, and upholding high ethical standards are the guiding principles of the firm.
Holding a degree in “Dirección y Administración de Empresas” (Business Management and Administration) from University of Malaga, Javier Ortega specialises in accounting and tax advice. He serves as a consultant, performing tasks of accounting, taxation and commercial law of companies from diverse sectors.
