Article 96 of the Spanish Value Added Tax Law generally and absolutely prohibits the deduction of VAT paid on goods and services used for client, employee, or third-party expenses. The Supreme Court of Spain has referred a preliminary ruling to the Court of Justice of the European Union to determine whether this restriction is compatible with the EU VAT Directive. The resolution of this matter is highly significant for businesses and professionals, as a favorable ruling could entitle them to recover overpaid VAT amounts.
Source BDO
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