Capital goods: the purchase that keeps answering for itself
Deducting the VAT on a van or a warehouse does not close the matter. Over the following years, if your prorrata moves, that deduction is adjusted.
Tangible goods intended to be used for more than a year as a tool of the trade or means of production, subject to a multi-year adjustment of the VAT deducted.
Article 108 of the VAT Act defines them as tangible goods, movable, livestock or immovable, which by their nature and function are normally intended to be used for more than a year as tools of the trade or means of production.
And it excludes them from below: goods with an acquisition value under €3,005.06 are not capital goods — the article still puts it as «quinientas mil pesetas», five hundred thousand pesetas — and neither are accessories, spare parts or work clothing.
The adjustment
Article 107: the deduction taken is adjusted over the four calendar years following the year of acquisition — five years of watching, counting the year of purchase — and over the following nine where land or buildings are involved, which is ten in total. It only has to be done if the year's final prorrata differs by more than ten percentage points from the one for the year of purchase.
An example with numbers
A van costing €30,000 plus €6,300 of VAT, bought with a prorrata of 60%:
- Initial deduction: 60% of 6,300 = €3,780
- In the third year the final prorrata drops to 40%: twenty points of difference, so an adjustment has to be made.
- Adjustment: (3,780 − 2,520) ÷ 5 = €252 payable on the last return of that year.
If the prorrata went up instead of down, the adjustment would be in your favour. And if the asset is sold within the period, the adjustment is made in one go for the years remaining.
The mistake that comes up most
Confusing this with depreciation for IRPF. They are two different worlds: a capital good is a VAT concept, with its €3,005.06 threshold and its five-year adjustment — ten if it is land or a building; depreciation is an expense for IRPF or Corporation Tax with its own tables and its own periods.
Where this carries on in Cairos: Fixed assets and depreciation.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
Prorrata
The percentage of your input VAT you can deduct when your activity combines transactions carrying a right to deduct with exempt transactions.
AccountingDepreciation
The systematic spreading of the cost of a fixed asset across the years in which it is used, as a deductible expense of each of them.
AccountingNet book value
The acquisition price of an asset less its accumulated depreciation and less any impairment recognised.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.