Limitations and exclusions in the deduction

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of VAT
Article 96 of the legislation establishes certain products or services to which deductible VAT does not apply for companies and professionals. These include:

Jewelry, accessories, natural or cultured pearls, and objects made wholly or partially of gold or platinum;
Diamond, ruby, sapphire, emerald, aquamarine, opal and turquoise;
Food, beverages and tobacco;
Entertainment and recreational services;
Goods or services intended for customer service, suppliers, employees or third parties;
Travel and hospitality services.
However, the same article establishes some exceptions depending on the type of expenses, where deductions can be obtained from products or services, as long as these regulations are met:

The good or service must be for exclusive industrial, commercial, agricultural, clinical or scientific application.
The goods must be intended for delivery or transfer of use for a fee, directly or through transformation by businessmen or professionals.
For their part, the services must be provided as such for a fee by entrepreneurs or professionals.
How do SMEs and self-employed workers handle non-deductible VAT?
Understanding what deductible VAT means is essential for small businesses and self-employed individuals. Applying the available deductions allows these businesses to improve their profits during the fiscal year and enhance their growth.

The regulations applicable to these companies are the same as list of canada cell phone number those discussed above, although special considerations must be taken depending on the assets used to carry out the business activity.

This applies especially to vehicles used for both personal and business use. In these cases, a deduction is applied that depends on the percentage of use given to the asset while working. Something similar occurs with renting when the self-employed person's activity is carried out in a home.

Deductible import VAT
It is also important to know how deductible VAT is handled in the event that goods are obtained through import. In these cases, the same principles apply to obtain the deduction, that is, that the imported product is only for use in the company's economic activity.

It should be noted that if intra-community acquisitions are made (with member countries of the European Union) the transaction may be exempt from VAT. This applies only if both companies comply with international requirements and are registered in the ROI.

How to calculate deductible VAT
Calculating deductible VAT is simple, but requires close attention to detail, as any error can cause problems with the Tax Agency and alter the declaration.

Before making the calculation, you need to do the following: