BASQUE COUNTRY AND NAVARRE: Cease in activity, be careful with self-consumption!

A problematic scenario where self-consumption often occurs is when a business owner ceases their activity, as they usually still have inventory, vehicles, furniture, or other assets that were used in their business.

How does the Tax Office act after receiving the notice of cessation?

It is common for the Tax Office to start a VAT verification to check the destination of the assets. If they have been used for personal purposes, self-consumption has occurred, and the Tax Inspection will demand the corresponding VAT.

Prove that there is no self-consumption

If you are in this situation, the simplest way to avoid this cost is to wait to process the cessation until you have settled all your business assets.

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

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

Are there any particularities regarding vehicles?

It is common for the Tax Office to start a verification regarding vehicles, as their subsequent private use is quite common. An 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 notarized certificate proving the vehicle's mileage on the cessation date (to show that it has not been used subsequently).
• A more cost-effective way to achieve the same goal is to take the vehicle to the ITV (MOT test) after the cessation. The technical report will record the mileage, and you can prove its non-subsequent use.

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