Marta Ibáñez is going to open a Pilates studio in Logroño. Between March and May 2026, before giving her first class, she bought reformers and equipment for 14,000 € plus VAT, paid a building engineer 3,500 € plus VAT for the project to fit out the premises and signed the lease. She starts giving classes in June. Some invoices are in her name with her tax number (NIF); others, for the cheaper equipment, are till receipts. She wants to know whether she can recover the VAT on all of that and whether those expenses reduce her profit for the first year.
The answer is different for each tax, and in both it depends more on the paperwork than on the intention.
VAT: the law expressly provides for this case
Article 111 of the VAT Act governs the deduction of tax borne before supplies of goods or services begin. Someone who was not carrying on an activity and acquires goods or services "with the intention, confirmed by objective evidence, of using them" in a business or professional activity becomes a business from the time of those acquisitions and can deduct the tax borne before starting to sell.
The provision has three practical consequences:
- The deductions are provisional and are subject to the adjustment under articles 112 and 113 of the Act, which corrects what was deducted if the actual activity turns out to be different from the one planned, for example with exempt transactions.
- The percentage the business proposes to the authorities applies, unless the authorities set another one in view of the characteristics of the activity.
- A refund of that tax can be requested without waiting for the end of the year, under article 115.
The provision therefore requires two things: that you have become a business from the time of the acquisitions, and that the intention rests on verifiable facts.
The trap of exempt classes
In Marta's case there is a prior question: if the Pilates classes she is going to give were VAT-exempt transactions, the VAT on the purchases would not be deductible, either before or after registering. Some teaching or health activities may be exempt depending on who provides them and how, and the classification depends on the facts. Classes at a Pilates studio aimed at physical exercise are usually taxable, but it is the first thing to confirm, because it decides everything else.
What counts as objective evidence
Intention is not shown by a statement. It is shown by documents that an inspector can see:
| Item | What it proves |
|---|---|
| Tax registration with a start date for acquisitions | That you told Hacienda about the start |
| Lease of the premises | That there is a place for the activity |
| Technical project and licence or notice to the town hall | That the premises are being adapted for that use |
| Full invoices in your name and tax number | Who bought and what VAT was borne |
| Quotes, website, advertising, booking diary | That the activity was genuinely being prepared |
| Loan or contribution for the investment | How it was financed |
Modelo 036 (the tax registration form) allows you to notify Hacienda, the Spanish tax office, that acquisitions began before sales. If Marta filed her registration in June with that date and did not mention the purchases from March to May, she should correct it by filing an amendment before asking for any refund. The sequence of the registration procedures is in Hacienda or Social Security: which comes first.
Marta's figures, step by step
Assuming the classes are taxable and the invoices are correct:
- Equipment and reformers: a base of 14,000 €, with 2,940 € of VAT at 21 %.
- Technical project: a base of 3,500 €, with 735 € of VAT.
- Deductible VAT borne before the start: 2,940 + 735 = 3,675 €.
- Till receipts that do not identify Marta: they do not allow the VAT to be deducted; they are left out.
- On the first Modelo 303 (the VAT return) she files, the deductible tax will exceed the tax charged, and the balance can be claimed or carried forward as each period allows.
- If an expense relates to a capital asset, such as the reformers, its deduction is subject to adjustment over the following years if its use changes.
Asking for a VAT refund in the first quarter of activity tends to attract a check. That is not a reason not to ask for it, but it is a reason to have the documents in the table above gathered before filing.
Deducting VAT requires a full invoice in the name of the person deducting, with their tax number and address. Simplified invoices or till receipts without those details do not give a right to deduct, even if the expense is real and has been paid. Purchases before registration are where most is lost, because you pay without yet thinking like a business. If there is still time, ask the supplier for the full invoice.
Income tax: more caution
The IRPF Act (on Spanish personal income tax) has no article equivalent to article 111 of the VAT Act. Net earnings from the activity are calculated under the corporation tax rules, according to article 28 of the IRPF Act, and expenses are allocated on an accruals basis. An expense in May is allocated, in principle, to the period in which it accrues, which is the same year in which Marta's activity begins.
The question is whether that expense is already linked to the activity. When the activity actually starts and the expense is preparatory and necessary for it, there are grounds for arguing that it counts in the first year. When the activity never starts, or the expense was incurred years earlier, the argument is much weaker. In any event:
- Assets that will be used for several years, such as the reformers, are not deducted in one go: they are depreciated from when they are brought into use.
- Earlier running costs, such as rent for the months of works or the technical project, are easier to defend if a start date has been notified that covers them.
- Everything requires an invoice or valid receipt and proof of payment.
There is no guarantee that the authorities will accept each earlier expense. What can be done is to make the file tell a coherent story: the dates on the 036, the lease, the invoices and the first class must fit together.
You can send us the earlier invoices and the chronology of the opening through the self-employed registration form. With that information we can see what is deductible for each tax and what documentation is missing.
What about Social Security
Buying equipment before you start does not on its own require registration in the RETA (the Social Security scheme for the self-employed), which requires the activity to be carried on habitually. But for Hacienda the acquisitions may already mark the start of the activity for the tax register. That difference in dates is legitimate if it reflects the facts. What is not advisable is to bring the tax date forward just to deduct and, at the same time, to maintain before the Tesorería (the Social Security treasury) that the activity had not begun when paid trial classes were already being given. If that happened, the situation is the one described in I registered late.
If the business never opens
If Marta had bought the equipment and in the end did not open the studio, the provisional VAT deductions would be called into question. The adjustment under articles 112 and 113 operates on the actual activity, and the authorities could demand repayment of what was deducted if they consider that the intention was not confirmed. There are cases in which the failure of a serious project does not prevent the deduction from being kept, but that depends on proof that the intention was real and on the reasons why the business did not open.
For those who work from home, expenses shared with the dwelling have their own rules, set out in working from home: what can I deduct. And the calendar of the first forms filed after registering is in the guide to the first year as self-employed.
At Salama Tax we review the invoices from before registration when the 036 is being prepared, so that the start date notified to Hacienda covers the earlier acquisitions and the first 303 can stand up if a check arrives.