HOW TO APPLY FOR THE REFUND OF OUTGOING V.A.T. IN A STATE OF THE EUROPEAN UNION

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.

 

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NEW REGULATION OF SPANISH NON-RESIDENT INCOME TAX

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.

 

 

 

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(*) 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€.

APPLICATION OF 10% VAT RATE TO DISC-JOCKEY NIGHT-CLUBS PERFORMANCES

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.

 

 

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