THE SPANISH INLAND REVENUE FOCUSES ON REAL ESTATE OF NATURAL PERSONS

The Spanish Inland Revenue has already approved 2017 anti-fraud plan. Taxable assets of natural persons will be subject to specific surveillance. More specifically, the Spanish Inland Revenue will review Equity Tax returns of non-prescribed years (the last four, in general terms).

Equity Tax had been technically abolished on January 2008, by means of Law No. 4/2008. With the economic crisis, the Spanish Government reinstated Equity Tax for 2011 and 2012. This was supposed to be a temporary measure. In the meantime, however, it has been extended year after year. In fact, it is still in place.

Real Estate is the main objective. The Inland Revenue obtains information on the ownership of the property, among others, by means of the information given by the Tax on Gains in Value of Urban Land (“plusvalía”), which is paid by the seller of the property when he sells it. The “plusvalía” is levied by the local administration, but the current direct collaboration among administrations makes it very easy for the Inland Revenue to have information at hand.

Note that non-residents are also subject to Equity Tax, though only for their assets located in the Spanish territory and for the rights that may be exercised in the Spanish territory.

Of course, there is an exempted amount. But be very careful with it, since the amount is different in each region. Thus, for instance, Catalonia´s exempted amount is only 500.000€, whereas Valencia´s is 1.000.000€.

Luisa Fernandez Baladron is a registered lawyer at the Il.lustre Col.legi d´Advocats of Balearic Islands. www.fernandezbaladron.com

DEFERRED PAYMENT OF TAXES FOR FREELANCERS

Measures of Royal Decree-Law 3/2016 in matters of deferred payment

Royal Decree-Law 3/2016, of 2 December, eliminated the option of granting deferred payment or split payment of specific tax debts, including split payment of Corporation Tax and that derived from taxes, such as VAT, which must be legally added, unless it can be shown that the added payments have not been paid.

Processing of deferred payment in accordance with Royal Decree-Law 3/2016

Applications for deferred payment or split-payment of debts affected by this measure will be rejected, while the remaining applications will be processed according to their amount, in accordance with the established procedure, which has not been modified by the Royal Decree-Law. Thus, applications for deferred payment or split-payment regarding debts for a total amount equal to or less than 30,000 euros will not need to provide guarantees, and will be processed via an automated process. Applications for a higher total amount must provide the appropriate guarantees and will be processed by means of an ordinary non-automated process. The limit exempt from providing guarantees was raised in October 2015 from 18,000 euros to the current 30,000 euros.

Impact of the measure on self-employed workers

With regards self-employed workers, the measure regarding split-payment of Corporation Tax does not affect them, given that they are taxed in Personal Income Tax. The measure on added VAT affects them, and they can continue to request deferred payment and split-payment of VAT if they can accredit that these added payments have not been collected. Therefore, the main change for self-employed workers will be that they are required to accredit that they have not collected the added VAT payments, specifically in requests that exceed the limit exempt of guarantees.

As a result, self-employed workers may request deferred payment, regardless of the amount, of their Personal Income Tax and VAT in the following circumstances, according to the total amount of the debt:

1. If the requests refer to a debt, the total amount of which is equal to or less than 30,000 euros, deferred payment will be granted, without guarantees, of up to 12 monthly payments, unless the payer has requested fewer monthly payments, in which case, the number of instalments requested will be granted. The periodicity of the payments will be monthly. They are processed by means of an automated mechanism.
2. If the requests refer to a debt, the total amount of which is over 30,000 euros, deferred payment will be granted, according to the type of guarantee provided by the debtor, and for a maximum term of 36 monthly payments, unless the payer has requested fewer monthly payments, in which case, the number of instalments requested will be granted. If the debts are for VAT, it will also be necessary to accredit that the VAT payments added have not been paid.

Source: Web-Site of the Spanish Inland Revenue (AEAT)

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TAXATION OF HOUSING LEASE WHEN THE TENANT IS A LEGAL ENTITY

Sometimes, the housing tenant is not a natural person, but a legal entity, which rents the housing for its employees.

In this case, two questions arise:

• if the lessor benefits from the reduction by 60% of the rental income, as it is the general rule in housing lease;
• if the aforementioned housing lease is VAT free.

INCOME TAX REDUCTION - In a recent Resolution, the Spanish Central Economic and Administrative Court has stated that, in such cases, the lessor may also apply the 60% reduction to rental income, since the law does not expressly require the tenant to be a natural person to benefit from the reduction.

VAT EXEMPTION - As far as the VAT exemption is concerned, the Spanish Central Economic and Administrative Court considers that the aforementioned lease will not be exempted from VAT, in general terms. In fact, VAT Act requires the tenant to be the one who occupies the real estate, to make the deduction possible (Art. 20.23 of VAT Act). Actually, if the housing is rented by a legal entity, we are in presence of a sublease (instead of a lease).

However, if the rental contract mentioned the name of both the tenant and the sublesee, the VAT exemption would be applicable.

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CHANGES TO CORPORATE TAX INTRODUCED BY ACT 48/2015, OF 29 OCTOBER

I. Calculation of the reduction of income resulting from specific intangible assets -

From 1. July 2016, the tax incentive from the reduction of income from certain intangible assets will be calculated as follows (Art. 23. 1, 2 and 3 LIS):

• Direct expenses related to the creation of the asset, excluding those (derived from sub-contracting with associated third parties per 30%)
• Divided into: direct costs directly related to the creation of the asset
• Per 60%

Financial expenses, repayments and non-related expeses will not be taken under consideration.

The above mentioned REDUCTION will be deducted from the financial base.

 

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CHANGES TO VALUE ADDED TAX INTRODUCED BY ACT 48/2015, OF 29 OCTOBER

I. Services related to exports  to forwarders and shipping agents are EXEMPT (Art. 21.5º.68 LIVA. This exemption is retroactive to 1. January 2015)

II. Import of goods that are allocated to duty-free shops subject to warehousing system other than customs warehousing are EXEMPT(Art. 65.d.69 LIVA) 

II The simplified method can only be applied when in the prior year none of the following limits was overcome  (Art.70 LIRPF):

• 250.000 € untaxed income for the whole economic activities.
• 250.000 € purchases in goods and services. Art. 31.1.3ª LIRPF)

(Above mentioned limits are only applicable in 2016/17. Limit for 2018: 150,000 €)

III. Civil societies which become Corporations after 1. January 2016 will be able to deduct the result of multiplying VAT + equivalence surcharge to the stock inventoried on the termination date. (Art.155 LIVA and 60 of RIVA).

 

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CHANGES TO PERSONAL INCOME TAX INTRODUCED BY ACT 48/2015, OF 29 OCTOBER

 

Premiums up to 1,500€ paid by the employer to a health insurance in order to cover disease of a disabled employee who has the condition of worker, spouse or descendant of the employer are EXEMPT. (Art. 42.3.c LIRPF, for direct method and art. 30.2.5ª LIRPF for objective method)

The objective method can only be applied when in the prior year none of the following limits was overcome: 

• 250.000 € untaxed income for the whole economic activities.
• 250.000 € purchases in goods and services. Art. 31.1.3ª LIRPF)
• 125.000 € operations in which it is compulsory to issue an invoice

The above mentioned limits are only valid in 2016 and 2017.

Deduction percentages for donations set aside for

carrying out priority sponsorship operations have risen by FIVE percentage points in 2016

 

 

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A TERRIFYING NIGHT

This incomplete story has been written by Joan Miralles.

I have add the illustration.

 

" In a very dark night Detlef Jefferson got up.”

Suddenly, he heard a noise downstairs. - Who's there? - he shouted - He tiptoed into the main door.

Detlef couldn' t believe it. The door had been forced and the handle was loose. The perpetrator had left visible traces... and fingerprints...

Oh no! There must be a burglar at home! Said Detlef. He was scared.

Jelling in panic, Detlef called the police. But the cops didn' t heed his call. - It's that middle aged man again - they said.

Detlef tried to calm down but he couldn' t help being nervous: something was moving behind the curtains. At that very moment he saw an arm. - Agggg! He screamed.

He had to do something immediately. His life was threaten. He took a baseboll bate that was hung on the wall... and he hit, and hit, and hit... - Noooooo! Shouted someone behind the curtains.

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