The self-employed in the food sector may continue to deduct the full amount of VAT paid in the purchase of goods necessary for the preparation and distribution of basic products, according to the binding resolution of the General Directorate of Taxes.
From Declarando they indicate that the resolution of the DGT has come to shed light on the doubts of the self-employed that arose as a result of the reduction of VAT to 0% on certain basic foodspromoted last December by the Government with the aim of containing the escalation of prices.
In its argument, the Administration explains that the self-employed and companies that are dedicated to the sale of these food products affected by the VAT reduction can deduct the amount of VAT supported in the purchase of goods and services necessary to carry out the activity.
In addition, the DGT resolution exempts from applying the pro rata rule: “According to the text of the Directorate General of Taxes, the application of a tax rate of 0% does not determine the limitation of the right to deduct the Value Added Tax borne by the taxpayer who performs the operation”, explains Marta Zaragozá, “which means that the self-employed and companies affected by the VAT reduction at 0% they should not apply the pro rata rule, since it is a VAT reduction, not an exemption”.
“The resolution of the DGT will allow the self-employed who are dedicated to the sale of these products to deduct more VAT and therefore save on their taxes “says Zaragozá. “By reducing their business expenses they increase their profitability and their competitiveness and by having less expenses they can offer more competitive prices to their customers”. “This is especially important in sectors where competition is high and customers are price sensitive.”
