The glossary to understand and take action

VAT deduction pro rata

A proportion used, under the applicable conditions, to determine the portion of VAT deductible on expenses common to transactions that do and do not give rise to this right.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

Its calculation and adjustments follow specific rules. This pro rata must not be confused with any estimated percentage of professional use. Methods based on actual allocation or sectors may be subject to authorisation or imposed by the administration.

In your file

What this changes in practice

The pro rata is used to assess the right to deduct where the activity includes transactions of different types for VAT purposes. It does not apply automatically to all expenses without examining their allocation. The calculation rules and adjustments must be checked. A reliable breakdown of revenue and purchases facilitates substantiation of the method used.

A scenario to help you understand

Educational example

A company carries out a taxable activity and an activity with no right to deduct. It distinguishes directly allocated expenses from common costs before calculating the recoverable VAT.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Analyser l’affectation des dépenses
  • Justifier la méthode retenue
  • Suivre les régularisations

The practical question

Find out more

Pourquoi affecter directement certaines dépenses avant d’appliquer un prorata ?

Une dépense clairement liée à une activité déterminée peut appeler une analyse différente d’un frais commun. Le calcul doit refléter les règles applicables et l’utilisation réelle. Documentez la ventilation et les données utilisées plutôt que d’appliquer un pourcentage uniforme par facilité. Une évolution de l’activité peut demander un réexamen et des régularisations.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

Right to deduct VATThe right to deduct allows, subject to conditions, the deduction of input VAT incurred in connection with transactions giving rise to that right.VAT taxable personA VAT taxable person independently carries out an economic activity subject to VAT rules.VAT returnThe VAT return reports transactions and tax amounts to the AED according to the regime assigned to the taxable person.VAT exemption schemeA scheme subject to conditions that exempts covered transactions from charging VAT, without granting the right to deduct the corresponding VAT on purchases.Fixed assetAn item intended for long-term use in the business, whose classification and measurement must be assessed under the applicable accounting framework.

Put it into practice

Explore further with our guides

Practical guideVAT deduction: checking supporting documents and mixed use

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.