In the July Newsletter we informed you that the Spanish Government has recently released the draft of the law that …
In the July Newsletter we informed you that the Spanish Government has recently released the draft of the law that will amend certain aspects of the existing VAT Law.
The changes that are introduced in the VAT law are the following:
a) Implementation of the new place of supply rule for telecommunication, broadcasting and television and services rendered by electronic means of the Directive2006/112/EEC to become in force since first January 2015. A new Chapter XI is added to Title IX of the VAT law.
To this end two new special optional regimes are created that contemplate the mini one option stop (MOSS) for companies providing these services to final consumers from third countries that have no permanent establishments nor obligation to register in any member state (“Regime external to the Union”) or companies residing in other member states different from the one where they provide the services (“Regime of the Union”).
b) Adaptation of the Spanish Law to recent doctrine of the European Court:
- Application of the general VAT rate (21%) instead of the reduced VAT rate (10%) to sanitary products except to those mentioned in a new Annex 8 that is introduced to the VAT law.
- Modification of the special margin scheme regime for travel agencies as a result of the decision of the Court of 26 September 2013 (C-189/11).
- Modification of the valuation rule for payments in kind.
- Treatment of payments by a third party which cannot be considered as grants excluded from the taxable base.
- Notary services related to financial transactions are excluded from the exemption applicable to the same.
c) A group of modifications aiming to introduce technical improvements:
- The concept of administration and public entities the activity of which is excluded from VAT is extended.
- The exemption to land contributions by members to compensation boards (the so called “Juntas de Compensación”) and from the same to its members is eliminated.
- The scope of the renounce to the exemption for second and subsequent transfers of buildings and rural land is extended.
- The requisite that the installation costs exceed 15% of the consideration is eliminated from the concept of supply with installation eligible for the special location rule. The only requisite is that the good is immobilized.
- The conditions as to the taxable base for the case of bankruptcy and late payment are eased and special rules are introduced for the case that the company applies the special cash regime.
- The difference of deductible VAT quotas required so to be able to apply for the special prorate is reduced from 20% to 10%.
- The requisite that there is a reciprocity agreement so to be eligible for the reimbursement of Spanish VAT through the 13th Directive is eliminated for certain type of expenses, namely:
– VAT incurred in the purchase or import of templates and moulds to be use in the fabrication of goods in Spain to be subsequently exported.
– VAT incurred as a result of accommodation, restaurants and transportation expenses on the occasion of the attendance to a fair, congress or exposition of a commercial or professional nature that is celebrated in the Spanish VAT territory.
- Definition of a VAT group is modified so to require that three kinds of relation exist (economic, financial and organizational).
- The possibility to liquidate the VAT corresponding to imports at the periodical VAT returns is introduced, pending subsequent developing regulations where the mechanics and the conditions for the taxable subject to be eligible for this special regime are established.
d) A group of modifications introducing anti-fraud measures:
- Application of the reverse charge rule is extended to the supply of:
– Consoles for video-games
– Computers and tablets
- New penalties are introduced:
– Failure to comply with the obligation to comply with the obligation to communicate the application of the reverse charge applicable to the contracting/subcontracting of construction or rehabilitation of buildings. A penalty of 10% of the VAT quotas involved is applied.
– Failure to declare the VAT quotas on the corresponding VAT return for the case that the special liquidation regime were to apply.
- Goods of a third country origin are excluded from the exemption to import of goods that are to be introduced in a VAT warehouse.
e) A group of modifications, essentially clarifications:
- The transfer of title which ensure, legally or de facto, the property, use or enjoyment of an immovable property or part of the same is considered as a supply of goods.
- Reference to other regulations is updated.
Manuel Pérez de Algaba