THE SPANISH TAX OFFICE CHECKS THE PAST OF NEW BUSINESSES

The Spanish Tax Office will promote prior review of reprehensive behaviour of new entities. The purpose of this review is to prevent future tax fraud and will be carried out within the campaign called “right from the start”, scheduled for the current year.

The Annual Control Plan affects measures of transparency of information and assistance to taxpayers in the compliance of tax obligations, particularly census obligations.  

Companies included in Immediate Information Supply that have a turnover below € 6,000,000 will receive a VAT draft declaration, which will make it easier for them to declare Corporate Tax.

Finally, Income Tax books will be compatible with VAT ones, thus reducing formal obligations of the taxpayer.

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VAT MINI ONE STOP SHOP

Since 2015, all telecommunication, broadcasting, TV and electronically provided services (hereinafter “TBTSE”) are taxed in the state of establishment of the recipient.

This rule has incredibly increased indirect tax burden. To reduce it, on January 1st 2019 it was established that, when TBTSE provided to final consumers located in other EU states do not exceed €10,000 (VAT excluded) they will be taxed in the state of the service provider, although the taxpayer may opt for taxation in other UE state where he is established.

Also with the aim of reducing indirect tax burden, an optional VAT scheme is created: Mini One-Stop Shop (hereinafter MOSS), a scheme that allows TBTSE entrepreneurs and professionals submitting their VAT returns only in the state in which they have registered as TBTSE operators.

Since January 1st 2019, TBTSE entrepreneurs and professionals who are not established in a UE country may use MOSS scheme, provided that they are registered in a UE country for VAT purposes. Thus, two variants of MOSS are created: external and internal.

EXTERNAL MOSS

External MOSS is applicable to those entrepreneurs or professionals not established in a UE country who provide TBTSE to individuals established in the UE. If the state of identification (and, therefore, of taxation) is Spain, TBTSE entrepreneurs and professionals are obliged to register with a form 034, to submit a quarterly form 368, to pay their VAT in time, to keep records of operations included in MOSS and keep them for 10 years and to issue an invoice when the recipient of the operations is established in Spain.

INTERNAL MOSS

Internal MOSS is applicable to those entrepreneurs or professionals established in the UE but not in the country of consumption, who provide TBTSE services to individuals established in an UE country.

TBTSE entrepreneurs or professionals whose country of identification is Spain are not allowed to deduct input VAT supported in the operations performed in MOSS in their 368 quarterly declarations, but they are entitled to ask for the refund of input VAT correspondent to operations which have been carried out in the state of consumption.

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VAT SCHEME FOR GROUPS OF ENTITIES

 

It is applicable (on a voluntary basis) to businessmen and professionals who are part of a group of entities linked to each other in the financial, economic and organizational orders, provided that each entity resides in the territory of application (Iberian Peninsula & Balearic Islands). 

The application of this regime places the entities that compose the group in the obligation of Immediate Information Supply. 

CHARACTERISTICS 

      The tax base is determined by differentiation between:

1. INTRAGROUP OPERATIONS –The tax base is calculated as the cost of intragroup operations with supported VAT (goods & services), provided that those operations give the right to VAT deduction, in accordance with article 94 LIVA. 
2.  OPERATIONS WITH OTHER ENTITIES (which do not belong to the group)- Each entity oft he group calculates and declares individually its own VAT.

To calculate the liquidation, the entities of the group will apply the SPECIAL PRORRATE.

LEVELS

This VAT scheme has two levels: normal & advanced (article 163 sexies cinco, in relation to article 163, octies, uno & tres LIVA).

·         NORMAL – each entity belonging to the group makes a group declaration, considering the deliveries and provision of services and the acquisitions and imports with respect to the entity it declares.

·         ADVANCED – The parent entity presents a single declaration for the entire group of entities, subject to the individual agreement of each of the subsidiary entities. 

CONDITIONS

The VAT scheme of group of entities requires the individual agreement of the entities that have opted for its application. The agreement must be adopted by the Board of Directors in the month of December of the year immediately preceding the one in which the agreement produces its effects and it has a minimum validity of 3 YEARS in case of normal level, and 1 YEAR, in case of advanced level. These deadlines are automatically extended, unless expressly waived. 

The VAT scheme of groups of entities will cease:

1. in case INDIRECT ESTIMATION becomes mandatory or
2. in case of breach of obligations arising from this VAT scheme (e.g.: declarations).

SPECIFIC OBLIGATIONS

The parent entity is responsible for the compliance of tax obligations derived from the VAT scheme of groups of entities; both the parent and each of the dependents are responsible their own individual obligations (article 164 LIVA).

The parent company is responsible for: 

1. COMMUNICATING TO THE SPANISH TAX OFFICE the fulfillment of requisites, the adoption of correspondent agreements, the option for the aplication of this VAT scheme, the list of entities belonging to the group, any modification that affects the VAT scheme, waiver of the VAT scheme, option for the advanced level and waiver to the advanced level. 
2. SUBMITING PERIODIC AUTOLIQUIDATIONS of the group of entities.
3. HAVING AN ANALYTICAL INFORMATION SYSTEM, based on reasonable criteria of imputation of goods and services used, directly or inderectly, totally or partially, in the performance of operations referred to in article 163.octies.uno of LIVA.

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VAT SCHEME FOR INVESTMENT GOLD

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Investment gold are gold bullion/sheets of milesimal fineness 995 [1] and gold coins of milesimal fineness 900, minted after 1800, that have been legal tender in the country of origin, sold at a price that does not exceed 80% of the market value of the gold contained in them. [2]

EXEMPTION OF TRANSACTIONS, WHEN THE OBJECT THEREOF IS INVESTMENT GOLD

In general terms, deliveries, EU acquisitions and imports of investment gold are exempt from VAT, but the taxable person may waive the exemption in some cases. Mediation services in these operations (on behalf of thirty parties) are also exempt. 

The exemption does not apply to EU acquisitions in which the provider of investment gold renounces the exemption. 

In case two possible exemptions were applicable (a gold investment and a EU acquisition one), investment gold one prevails. 

WAIVER OF EXEMPTION

Providers of investment gold may waive the exemption in the following cases:  

1. When they are regularly dedicated to produce investment gold or to transform non-investment gold in investment gold.
2. In deliveries of gold which has been transformed into investment gold. 
3. When the acquirer is a buisnessman or a professional.

The exemption can also be waived in case of mediation on behalf on thirty parties in exempt operations, provided that the acquirer is a businessman or a professional, and  when the provider had waived the exemption. 

The waiver must be done per operation, performed by the service provider and communicated in writing to the acquirer (prior or simultaneously to the acquisition). The acquirer also has to be informed in writing of his henceforth condition of taxpayer. 

DEDUCTIONS

In general terms, supported VAT is not deductible, since investment gold deliveries are exempt from VAT. 

Exceptionally, the following must be taken into account:

1.  Exempt deliveries of gold investment generate the right to deduct supported VAT quotes when done by businessmen or professionals who have produced or transformed that investment gold. 
2. Deliveries of exempt investment gold by businessmen who are not contemplated in a), generates the right to deduct.
3. Supported VAT corresponding to the internal or EU acquisition of that investment gold, when the supplier had waived the exemption.
4. Supported VAT corresponding to acquisition or import of investment gold, when it did not meet the pertinent requirements at the time of its acquisition or import.
5. Supported VAT corresponding to services of change of form, weight or milesimal fineness.

TAXABLE PERSON

In case of waive to the exemption by the provider, the taxable person of investment gold deliveries, is the recipient businessman or professional. 

FORMAL OBLIGATIONS

Businessmen and professionals who carry out operations of investment gold must keep copies of all invoices corresponding to these operations within 5 years (article 140 sexies of VAT Law)

Businessmen and professionals who carry out gold investment operations and other kind of operations must pertinently separate the operations corresponding to each scheme in their VAT books. 

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[1] Provided that the weight accomplishes addendum 9th of VAT Law.

[2] These requirements are accomplished in all coins related by the EUOD before 1st of December each year.

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VAT SPECIAL ARRANGEMENT FOR SECOND HAND GOODS, ANTIQUES, WORKS OF ART AND COLLECTOR’S ITEMS.

It is a voluntary VAT arrangement applicable to resellers, characterized by the form of calculation of the tax base.

It admits two modalities of tax base calculation: operation by operation and by global margin.

OPERATION BY OPERATION

In this case, taxpayers can choose, in each operation, between the special regime or the general one.

If they choose the special regime, they calculate the tax base as follows:

GLOBAL MARGIN           

If the taxpayer opts for this modality, the tax base is calculated through an inventory, as follows:

If the result is negative, the difference is added to the purchases oft he last period; if the result is positive, it is added to the sales of the last period.

Invoices documenting this kind of deliveries cannot separate the VAT quota, for this is NOT DEDUCTIBLE for the client. If the delivery is destinated to another EU country, the invoice must state that the operation has been taxed in accordance to articles 312 to 315 of the Directive 2006/112/EU.

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SALES EQUALIZATION SYSTEM

Sales equalization tax is a mandatory VAT system for retailers, that is to say, for B2C merchants that sell movable goods/ livestock which have not been processed/manufactured by them, to people or entities who do not have the condition of entrepreneurs  [1].

This tax system is intended to make it easier fort he retailer to account VAT:

1. When they buy, they must warn the supplier about their condition of retailer. 
2. VAT is declared by the supplier, together with the following percentage:
   
3. When selling, retailers charge VAT to their clients, but not the surcharge. 
4. They are not required to invoice for their sales (unless they are required by the customer) and they do not need to keep any VAT accounting records. 
5. They are not obliged to deliver a VAT declarations resulting from this quotes to the Spanish Tax Office (it is the supplier who does it), but for he following EXCEPTIONS:

a.       Intra community acquisitions

b.       Imports

c.       Acquisitions of goods with inversion of taxpayer

In these cases, retailers must deliver a FORM 309 to the Spanish Tax Office.

This system does not apply in the following operations:

• Sales to taxpayers oft he agriculture system 
• Intra-comunity deliveries 
• Imports

At the beginning of their operations, retailers have to liquidate (and pay) the amount resulting from applying VAT rates and surcharge percentages in force at the start date tot he value of their stocks. 

Consequently, when they cease in their activities, they can deduct the amount resulting from applying VAT and surcharge rates in force at the end date to the value of their stocks. 

To make these liquidation possible, retailers have to carry out an inventory with date oft he day immediately prior to their start or end. The result has to be delivered by the Spanish Tax Office within 15 days.

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[1] Retailers sell more than 80% to people or entities who do not have the condition of entrepreneurs (or to the Spanish Social Security).