By means of the declaration of VAT of Self Consumption, the self-employed have the obligation to pay and charge the VAT of the provision of use of goods or services carried out under the free title.
What does VAT of Self Consumption mean?
The declaration of VAT of Self Consumption, has the objective of preventing you from making privileged consumptions without charging the corresponding VAT.
An example of this is if a company acquires computers, with VAT deduction, and these are intended for personal use or are given as gifts to relatives or friends, it would be a case of self-consumption subject to VAT, this means that it must be declared the acquisition and pay the corresponding tax.
Currently, in Spain, VAT of Self Consumption is regulated under Law 37/1992 on Value Added Tax, more precisely in articles 9 and 12 that refer to goods and services.
According to what the norm indicates, self-consumption of goods and services is subject to VAT only when the amount paid on the purchase of a product or service can be partially or completely deducted.
Note: It is important to know that the goods or services must be part of your business assets.
Self-consumption of goods
In the VAT declaration, self-consumption of goods refers to the personal utility of goods, defined in specific cases such as those that we will present below:
- Free transfer of business assets to staff or yourself for private use.
- Free transfer of the power of disposition of tangible assets that make up your business assets.
- Change of affectation of a tangible asset from one sector to another different from its professional category, if this is not due to the modification of a regulation.
Self-consumption of services
Self-consumption of services is considered when you carry out one of the following cases that involve operations without consideration:
- Transfer of rights over business or professional property to your personal assets.
- Use of professional and business media for personal purposes external to the activity.
- Provision of free services to third parties.
Different types of VAT of self consumption
Normally self-consumption of VAT must be differentiated as follows:
- External: When a good or service offered by your company and that benefits free of charge, individually and privately, to yourself or to third parties.
- Internal: When the consumption of goods or services is maintained within the production process of your company. It can be given in two ways:
- The goods used in your business activity are destined to another, but within a different sector.
- When you use stocks or current assets of your company as investment assets within it.
How to declare VAT of self consumption?
The VAT of Self Consumption is indicated in the declaration corresponding to the period in which the purchase of goods or services was made.
In this VAT declaration, the value of the acquisitions considered self-consumption must be included in the corresponding field of the declaration and the reduced VAT rate must be applied to the total.
On the other hand, it must be taken into account that you have to keep the receipt of the purchases that you consider self-consumption, so you can prove that your company meets the requirements established by law.
There are cases in which you can apply VAT of self consumption automatically, without having to include purchases in the VAT return. This process may be possible when you make purchases from other companies that are subject to special regimes.
There are special cases that do not fall into this category:
- When you cannot fully deduct the tax on the goods and services purchased.
- If the goods have been part of gifts or commercial samples. In this case they would not be subject to VAT either.
- When the change of the good has been produced by tax changes or if it is due to a change in VAT.
Do you need more information about self-consumption?
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