BASQUE COUNTRY AND NAVARRA: Self-consumption due to cessation

A contentious situation in which self-consumptions often occur is when a business owner ceases their activity, as they may still have in their possession inventory, vehicles, furniture, or other assets used in their business.

How does the Tax Agency act when the cessation is communicated?

It is common for the Tax Agency to initiate a VAT check to verify the destination given to the assets. And if they have been allocated for personal use, self-consumption will have occurred, so the Inspection will demand the corresponding VAT.

Prove that there is no self-consumption

If you find yourself in this situation, the easiest way to avoid that cost is to wait to process the cessation until you have liquidated all your business assets.

If this is not possible (for example, because you want to avoid the Social Security continuing to demand the self-employed contribution) and you process the cessation immediately, gather evidence to prove that there has been no self-consumption:

• If you plan to sell the goods or assets, keep a copy of the sale advertisements in magazines, the Internet, etc. Thus, if in the future you are subject to a check and you still have items to transfer, you can demonstrate your intention to sell them.
• If the assets are too specific and you think you will not find buyers, consider destroying them or selling them as scrap, and keep the documents that prove the destruction or delivery to the scrap dealer.

Is there any particularity in the case of vehicles?

It is common for the Tax Agency to initiate a check regarding vehicles, as their subsequent private use is quite common. Well, one alternative to prove that there has been no self-consumption is to justify that the vehicle's mileage has not changed since the cessation date; for example:

• Provide a notarial certificate that certifies the vehicle's mileage on the cessation date (so that it is evident that it has not been used thereafter).
• Another more economical way to achieve the same objective is to take the vehicle to the ITV after the cessation. The technical report will record the mileage, and you will be able to demonstrate its non-use thereafter.

Our professionals will advise you on the cessation of your activity and assist you in liquidating your business assets.