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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MODIFICATION OF THE PAYMENT PERIOD OF THE BUSINESS TAX

 

The voluntary period of the Business Tax (I.A.E.) payment has been modified by a Resolution of the Spanish Tax Agency published yesterday (June 19^th of 2019) by the Spanish Official State Gazette. This modification affects both national and provincial rates for the financial year 2019.

The Business Tax applies to Corporations, Civil companies, entities without legal personality which constitute an economic unit (or a patrimony susceptible of taxation) and Non Residents with a permanent establishment in Spain engaged in an economic, professional or artistic activity within the Spanish territory (art. 35.4 of Law 58/2003, of December 17th, connected with art.82.1.c of Law of Local Treasuries, T.R.L.R.H.L.). Even though, taxpayers in the first 2 tax periods of the economic activity (82.1.b. of T.R.L.R.H.L.) or with a net turnover lower than 1.000.000€ are exempted.

Payment period

The payment in voluntary period for 2019 has been set from September 19^th to November 20^th of 2019, both dates being inclusive.

Form of payment

The Spanish Tax Agency shall send to the taxpayers the payment document, which has to be presented in any of the credit entities considered as “Collaborating” (entidades colaboradoras) for its payment.

In case the payment document of the Business Tax was not received, the taxpayer has to pick a duplicate up in the appropriate Tax Office for its fiscal domicile (Delegación de la A.E.A.T./ Administración de la A.E.A.T.)

 

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