In practice it shows up when an autónomo or a small SL combines a normal activity with an exempt one: a psychologist who also gives talks, an academy that also sells materials, or a professional who rents out a home alongside the business. During the year you apply a provisional percentage, usually the one from the previous year, and in the last return of the year you recalculate it with the real figures and adjust the difference.
There is also the special pro rata, which allocates input VAT expense by expense depending on which activity each one serves, and which is mandatory in certain cases. This is one of the trickiest corners of Spanish VAT: if you mix, say, exempt teaching with consulting, have an advisor check the calculation.
The typical mistake is deducting all input VAT as if the whole activity carried a right to deduct, or skipping the year-end adjustment. Another slip is forgetting that the pro rata also affects investments, such as a computer or a vehicle, whose VAT is adjusted over several years if the percentage changes significantly.
It is linked to exempt transactions (operación exenta), to the quarterly VAT return and to the annual summary, where the final percentage is reported. kontora keeps your accounts in double entry and prepares your forms box by box, but the pro rata percentage is worth checking with your advisor.
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