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The Spanish Government has recently approved a Bill of Law to encourage the entrepreneurial activity. Amongst the measures approved is the so called “VAT Cash accounting scheme”.


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 The Spanish Government has recently approved a Bill of Law to encourage the entrepreneurial activity. Amongst the measures approved is the so called “VAT Cash accounting scheme”.

This scheme has been requested by small entrepreneurs and professionals for the last years and, finally, it will come into force as of January 2014.

The main aspects of this scheme are the following:

– VAT taxpayers with a turnover not exceeding EUR 2 million can opt for its application. Companies applying this scheme will have to pay their output VAT amounts to the Tax Administration only when they have received payment from their customers;

– They will only be able to deduct input VAT once they have paid their invoices to their suppliers.

Companies applying this regime must amend the VAT records accordingly as they must include a reference to the date of payment of the invoices and also to the means used for such payments.

The regime will be implemented in a very particular way as those entrepreneurs not opting for the regime but receiving supplies from companies applying it, will only be able to deduct their input VAT amounts once they have paid their invoices, rather than when they receive them as it is happening now. We foresee that this will create some problems and distortions. It is likely that companies not applying the regime will reject to do business with suppliers that have opted for its application.

Fernando Matesanz,
Spanish VAT Services