Tuesday, 19 September 2017


If you have traveled to another state of the European Union due to your economic activity, you can request the refund of the outgoing V.A.T. of your deductible expenses within that travel by delivering a form No. 360 to the Spanish Inland Revenue. The submission of this form has to take place before 30th September of the year immediately following the one in which the purchase took place.

To obtain the VAT refund, the expense must be:

1.     DEDUCTIBLE according to the Spanish laws (e.g.: hotels are deductible/ restaurants are not),

2.     DOCUMENTED in an invoice,

3.     GREATER THAN 50 €.

If the expense was greater than 400 €, the application for VAT return could be delivered on a QUARTERLY basis, instead of a yearly.

The return of outgoing VAT has to be requested separatedly in each country where the VAT refund is asked, since the administrations the form is addressed to are also different. The Inland Revenue has 6 months to answer the request, but the average time of recovery is 4 months

Outgoing VAT paid in NON-EU countries can only be recovered in case of reciprocity agreement between Spain and the country VAT has been paid in. This is the case of Monaco, Switzerland, Canada and Japan.

Monday, 18 September 2017


Non-residents who have a property in Spain are taxable by the Spanish Non-Resident Income Tax. Even if the property has neither been rented nor sold, there is an imputed rent to have under consideration, which becomes chargeable on December 31st.

Here is a list of last legislative changes concerning this tax:

1.     Natural persons who are NON-RESIDENTS in Spain CAN OPT TO PAY INCOME TAX FOR RESIDENTS (instead of income tax for non-residents): when they are residents in another EU country, Norway or Island AND their income in Spain within the year is less than 90% of the minimum personal and family allowance that would have been applied to them if they had been residents in Spain (provided that their income abroad has also fulfilled this requirement). This might be particularly interesting for low-income earners.
2.      Natural persons who are NON-RESIDENTS in Spain can benefit from REINVERSION ALLOWANCE provided that they are residents in another EU country, Norway or Island and that they fulfill the requirements stipulated at article No. 33 of Income Tax Law for residents.
3.     Natural persons who are NON-RESIDENTS in Spain can NO LONGER obtain an exemption of 1.500€ for DIVIDENDS.

4.    Natural persons who are NON-RESIDENTS in Spain can now apply the  REDUCING COEFFICIENTS of Income Tax for residents, provided that they have a PERMANENT ESTABLISHMENT in Spain.

5.     Natural persons who are NON-RESIDENTS in Spain can now obtain a TAX RETURN DRAFT of their imputed income from the Spanish Inland Revenue.

6.      TAX RATES of PERMANENT ESTABLISHMENTS are determined by Corporation Tax Law.

7.      TAX RATE of non-residents WITHOUT permanent establishment has been reduced from 24% to 19% for citizens of the UE, Norway and Island.

8.      TAX RATE of entities in INCOME ALLOCATION SYSTEM is 25%.

9.      A Transferring money abroad by a PERMANENT ESTABLISHMENT is taxed with an extra tax-rate of 19%.

10.   As far as DEDUCTIBILITY OF EXPENSES is concerned, the law makes a distinction between NATURAL PERSONS AND LEGAL PERSONS. Natural persons can deduct the expenses which are deductible according to Income Tax legislation for residents; legal persons can deduct the expenses which are deductible according to Corporation Tax legislation.

11.   Current regulation now admits that the profits obtained by a permanent establishment in Spain which are distributed to the PARENT COMPANY (*) in another EU state can benefit from an EXEMPTION (the same as if the profits had been distributed among Spanish companies belonging to the same holding/group), provided that the existence of the PARENT COMPANY was due to VALID REASONS.
(*) Parent company is the one who OWNS AT LEAST 5% of the capital of another company (directly or indirectly) or the one which OWNS SHARES WITH A TOTAL VALUE OF MORE THAN 20.000.000€.

Sunday, 17 September 2017


Until very recently, performances at discotheques had always been taxed at 21% VAT rate.
A recent binding consultation of the General Directorate for Taxation (V1707-17, of 30.06.2017) considers that a disc-jockey not only plays music, but he also performs an artistic work of musical selection. As a result, such performance has to be considered a live cultural show.
Based on this consideration, the aforementioned binding consultation V1707-17 concludes wwthat the pertinent VAT rate to be applied to a disc-jockey performance is 10%.

Further information:
Article 90.1 of Law 37 / 1992 , of 28.12.1992.
Article 60 of Law 3/2017, of 27.06.2017.

Binding consultation No. V1707-17, of 30.06.2017.




Tuesday, 22 August 2017


Spanish Tax Advisors are concern about the recent intentions of the Spanish Inland Revenue to advance a number of tax returns to the month of January. Most specifically, the Spanish Inland Revenue is planning to require in January the following statements:

  • Modelo 347 - annual statement of operations with third parties
  • Modelo 345 - Statement of contributions to rent plans and pension funds
  • Modelo 171 -  Statement of impositions and dispositions of funds
  • Modelo 184 – Statement of entities in attribution system (entities with no juridical personality)
Of course, those entities in V.A.T. “Immediate Identification System”, which obliges to deliver information about sales and purchase invoices within a period of 4 days (8 days until the end of 2017) would not be compelled to deliver any of the related to forms to the Tax Office.

In order to make this new rules more user-friendly, deadlines to deliver VAT statements corresponding to the 4th quartal of 2017 are to be extended until January 30th 2018 (See Royal Decree 529/2017, of 26th May).

Thursday, 10 August 2017


One of the latest changes of Spanish Annual Accounts 2016, with regard to those of previous years is the need of mentioning the average payment period to suppliers. This requirement was introduced by the Spanish Law No. 15/2010, of 5th July 2010, as a mesure to prevent late payment in trade operations. However, the subsidiary legislation was only adopted on 29th January 2016 by a reglamentation of the „Spanish Accounting and Auditing Institute (ICAC)”.
To calculate the average payment period, we will use the following ratio, multiplied by 365:

Average payment period
Average of trade accounts payable
Annual purchases and external services



The concept of “trade accounts payable” includes all the Spanish accounts of groups 40 and 41. The average is the result of dividing into 2 the adition of the balances as at 31.12.2015 & as at 31.12.2016.
As far as annual purchases are concerned, they include all the accounts of groups 60, 61 and 62.

In the following days, we will upload an Excel table to our website, showing an example of calculation oft he average payment period.

Wednesday, 10 May 2017


The Spanish Treasuy Department has just agreed the Ministerial Order HFP/227/2017, of 13. March, which modifies the form No. 222, used for fiscal consolidation.

To see the new form, please log into: https://www.boe.es/boe/dias/2017/04/20/pdfs/BOE-A-2017-4294.pdf


The Spanish Treasury Department has just agreed a reduction of the indexes which are applicable to agriculture, livestock and fisheries. This reduction has been adopted with basis on a report from the Spanish Ministry of Agriculture, which shows the concurrence of exceptional circumstances in the development of agricultural activities in 2016.


The new indexes can be consulted in the Order of the Spanish Treasury Department No. HFP/377/2017, of 28. April, published in the Spanish Official Gazette on 4.May 2017.
To see the new indexes, please log into: https://www.boe.es/boe/dias/2017/05/04/pdfs/BOE-A-2017-4822.pdf


Saturday, 22 April 2017


Spanish V.A.T. system for used goods is characterized for its particular way of determining V.A.T. tax base. Its application is voluntary and it supports two variants:


In this case, the taxpayer can choose whether to apply the special V.A.T. system for USED GOODS or the GENERAL one in each operation.

1.      If he decides to apply the special system:


a.      OUTPUT VAT is determined on the basis of the operation profit margin


         ( (transmission price + VAT) – (purchase price + VAT) ) x 100
                                              (100 + applicable tax rate)


b.      INPUT VAT is not deductible. Notwithstanding, input VAT of fixed, indirect costs (such as telephone or rentals) is deductible.


2.      Without prior communication to the Spanish Inland Revenue, the taxpayer may not apply the special system to an specific operation. In this case:


a.      OUTPUT VAT is determined on the basis of sales price

b.      INPUT VAT is deductible


This variant is only applicable to certain goods, such as stamps, stamp effects, notes and coins of philatelic or numismatic interest, magnetic tapes, books or magazines.  In this case, VAT is determined on the basis of the profit margin of all the operations within the period
(Regulation: articles 135-139 of VAT Law 37/1992, 28.12.1992, 50-51 of RDL 1624/1992 and 6 of RD 1619/2012

Sunday, 16 April 2017


Temporary joint ventures operating in Spain can be included in a special taxation. When this tax system is used, the tax bases are not submitted to Corporate Income Tax (25%-30%), but attributed to partners (article 48 of Royal Decree Law 4/2004 (0Spanish Corporate Tax Act).

To include a temporary joint venture in the special taxation system, the joint venture has to be registered at the Spanish Ministry of Treasury and Public Administration.


The procedure starts by filling an application form, which can be found under the following link:

The form has to be delivered ONLINE to the Spanish Inland Revenue, attaching the joint venture´s deed of incorporation.


In case the Spanish Inland Revenue took a non-favorable decision, the partners could submit a reconsideration within 1 month. Reconsiderations have to be heard within a period of 6 months.


If the decision to the reconsideration was not favorable, the partners of the temporary joint venture could submit a claim at the Spanish Economic Administrative Courts within 1 month.



Saturday, 15 April 2017



Transfer pricing are those established between related parties, according to article 16 of Spanish Corporate Tax Law 43/1995, of December 27 (with the wording of Measures of Prevention of Fiscal Fraud Law 36/2006, of November 29).

The aforementioned article establishes that transactions between related parties MUST be valued at their normal market value. This valuation has to be documented in the form established for that purpose by the Spanish Tax Administration.

Current criteria to determine market value are those determined in OECD Pricing Transfer Guidelines for Multinational Enterprises and Tax Administrations. That is to say:

1.       Comparable uncontrolled price – The C.U.P. method compares the price charged for property and services in a controlled transaction to the price charged for property and services in an uncontrolled transaction. However, this system is extremely complex in the practice:


a.       Because of the difficulty of finding reliable information on prices and

b.       Due to the impossibility of comparing prices, since prices are extremely sensitive tot he characteristics of each transaction. In practice, this method requires a different valuation for each transaction. C.U.P. method is quite reliable in case of financial transactions, such as those with commodity sales, for instance. Notwithstanding, it is totally inefficient in case of operations involving the incorporation of an intangible asset (e.g.: a Loewe handbag or a Prada dress).


2.       Resale price method – The resale price method begins with the price at which a product that has been purchased from an associated enterprise is resold to an independent enterprise. This price (the resale price) is then reduced by an appropriate gross margin on this price (the „resale price margin“), representing the amount of which the reseller would seek to cover its selling and other operating expenses and, in the light oft he functions performed, maek an appropriate profit. This method reduces the need for comparability of the product, but it requires a greater functional comparability of the company, the contractual conditions and the economic circumstances of the transaction.


3.       Cost Plus – As in the case of resale price, cost plus method begins with the costs incurred by the supplier of property or services in a controlled transaction for property transferred or services provided to an associated purchaser. An appropriate cost plus mark up is then added to this cost, to make an appropriate profit in light of the functions performed and the market conditions. The typical example is that of a company that provides archtectural services and calculates their prices by applying a profit margin on the hours of work of their employees. This method may also represent drawbacks, since it does not take into account production efficiency.


4.       Profit Split – The transactional profit split method seeks to eliminate the effect on profits of special conditions made or imposed in a controlled transaction by determining the division of profits that independent enterprises would have expected to realise from engaging in the transaction or transactions (that is to say: assets, employees, expenses). To do so:

a.       The overall profit is determined, adding up the profits obtained by each party in the operation and

b.    The abovementioned overall profit is distributed among the parties, according to the proportional contribution to the operation of each of those parties. This system is more consistent with what is usually done by independent companies, who usually split results according to their investment on the transaction.


5.       Transactional Net Margin Method – The transactional net margin method examines the net profit relative to an appropriate base that a taxpayer realises from a controlled transaction. Thus, it operates in a similar manner to cost plus and resale methods. Like resale and cost plust methods, transaction net margin one is applied only to one of the parties. This can affect the overall reliability. Besides, there are also difficulties in determining an appropriate corresponding adjustment when applying the transactional net margin.


The determination of the operation value must be documented in compliance with the requirements of article 18 of RD 1793/2008. That is to say:

·         Documentation which must be accompanied by the taxpayer:


o   Identification of the taxpayer and of the related parties.

o   Description of nature, charateristics and price of the operation

o   Analysis of comparability, carried out by the company

o   Justification of the valuation method employed

o   Cost sharing criteria

o   Other relevant information


·         Documentation which must be accompanied by the group:


o   Organizational, legal and operational structure of the group

o   Identification of the related parties taking part in the operation

o   Description of nature, price and flows of operation

o   Functions and risks assumed by each related party

o   Ownership of brands and intangibles affected

o   Group policy on transfer pricing

o   Cost sharing agreement

o   Valuation agreements

o   Group Report

Friday, 24 March 2017


Since the beginning of the economic crisis, forcible evictions have been a constant in Spain. Particularly affected are people who have lost or are in risk of losing their job and have difficulties entering or re-entering the labour market.

Recently, the Royal Decree-Law Nr. 5/2017, of 17.03.2017, has approved the following two important measures to protect people considered to be in risk of social exclusion:

1.      Eviction procedures can be suspended to a maximum of 7 years. This term ends on 05.05.2020, since the deadline runs from the entry into force of Law 1/2013.


2.      In case the eviction has already occurred, they may request from the creditor the rental of the house for a maximum annual rental price of 3% of knockdown price. The deadline for requesting it is six months, from the entry into force of the RDL Nr. 5/2017.

The most significant group of people in situation of social exclusion are those who have suffered a significant alteration of their economic circumstances in the last 4 years. This alteration occurs when the result of dividing the mortgage burden into the rent had increased, at least, 1,5.

Other people in situation of social exclusion are the following:

1.      Large families

2.      Single parents

3.      Families with a minor

4.      Families in which a member has a disability greater than 33%

5.      Victims of gender violence

6.      Debtors over 60

7.      Families living with disabled, dependant or serious ill people.

The RDL Nr. 5/2017 has entered into force on March 18th of 2017.
Luisa Fernández Baladrón is a registered lawyer at the I.C.A.I.B.

Friday, 10 March 2017


Starting to operate in Spain, either as a buyer, a lessor, an administrator… or simply as an employee, requires a registration at the Spanish Inland Revenue. At the time of the registration, the Spanish Inland Revenue assigns the concerned a Tax Identification Number for Foreigners, known as „N.I.E.“.

Any foreigner who wants to carry out a transaction in Spain (open a bank account, set up a business, rent/buy a home…) needs this number.

Some years ago, the „N.I.E.“ was obtained almost immediately, but the huge demand has caused a slowdown at the Public Administration. Currently, an application for a N.I.E. in absence of the concerned may take as long as two weeks.

Notwithstanding, the procedure can be speeded up enormously, if the concerned accompanies us to the Foreign Office to apply for the N.I.E.

Notice that, nowadays, only registered lawyers are allowed to represent someone at the Foreign Office.

Mobile: +34 673 164 613

Monday, 27 February 2017


It is already a tradition of Spanish local finance legislation to assume that any property sale brings about a profit as a result. Such rules calculate taxes on the basis of cadastral value of the property, not on the actual profit obtained in the sales transaction.
Notwithstanding, it is a fact that, since the beginning of the economic crisis, houses are being sold at a lower price than they were bought.  In a judgement of February 16th 2017, the Spanish Constitutional Court has declared unconstitutional two articles of the Foral Law on Basque, since they do not take into account the actual capital gain obtained in sales operations. 
The mentioned articles are solely aplicable in the Gipuzkoan foral territory. However, these rules are exactly the same as the ones included in the Spanish General Local Finance Act.
As a result, some Spanish law firms and tax consultants are advising their clients to claim against Tax on Gains in Value of Urban Land returns of non prescribed years (the last four) as soons as possible, as there is a chance that the Spanish Constitutional Court gives judgement against the liquidations of this tax.  The advice tries to avoid the consequences of a possible temporary limitation of the Constitutional Court. Such a limitation is foreseeable, bearing in mind that a massive claim by taxpayers is also predictable.  
In this sense, it is advisable to submit an application for refund of undue income immediately after having paid the tax. 

Luisa Fernández Baladrón is a registered lawyer at the Il.lustre Col.legi d´Advocats of the Balearic Islands - http://www.fernandezbaladron.com