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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TRAVEL AGENCIES VAT SYSTEM

It is a mandatory VAT system in which the tax base is determined as:

• Travel Agencies support VAT on their purchases (goods and services). 
• However, the part of VAT corresponding to purchases in “benefit of the traveler” is not deductable (e.g.: lodging services provided by other companies). 
• Travel agents charge VAT in their invoices, but they do not record it separately.

REQUIREMENTS

This VAT system applies to travel agencies /tour-operators when they use goods and services provided by other companies.

Consequently, it does not apply to trips that are carried out exclusively with the travel agency’s own means of transport or lodging. In case trips were provided partly by third-parts and partly with the travel agency’s own means, it would only apply to the services provided with third-party means (DGT V3335-16).

PLACE OF EXECUTION AND EXEMPTION

Operations are considered to be carried out where the travel agency has its activity or a permanent establishment. 

TAXABLE BASE

It is calculated operation per operation, as the gross margin for the travel agency in each operation.

Notwithstanding, the General Directorate of Taxes also accepts that the travel agency declares the provisional tax base of prior year and a regularization of the tax base in the last declaration of the year (see DGT V0100-15).

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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).

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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PENALTIES FOR CASH PAYMENTS IN AMOUNTS GREATER THAN THE ONES ALLOWED BY LAW

 

 

Since the entry into force of Law 7/2012, of 29^th October, entrepreneurs and professionals acting as such are not allowed to pay in cash transactions with an amount equal or greater than 2,500€ (or its equivalent value in foreign currency).

If the payer is a natural person who is a resident abroad and is NOT acting as an entrepreneur or as a professional, the limit shall be 15,000€.

Cash is understood as paper money, coin, bank checks and any physical or electronic means designed to be used as payment to bearer (article 34.2 of Law 10/2010, of 28^th April).

Entities intervening in the payments are obliged to keep the documentation that certifies that such operations have not been paid cash for, at least, 5 years.

In case of break of these rules, the penalty will consist of 25% of the total amount delivered in cash and will be imposed to both the PAYER and the RECEIVER.

 

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DEDUCTION FOR INVESTMENT IN RECENTLY INCORPORATED COMPANIES

As of January 1st 2018 the maximum annual deduction base is increased from 50.000 to 60.000€ and the percentage of tax deduction from 20% to 30%. (article 68.1 and additional provision No. 38ª.2 of Spanish Income Tax Law)

 

The deduction for investment in recent incorporated companies was first regulated by the Law No. 14/2013, of September 27^th, in order to favour the investment of capital in the creation of companies.

This deduction is exclusively applied to the part of the total tax liability which corresponds to the Spanish central state.

The maximum annual deduction base (formed by the value of the shares subscripted) is 60.000€.

In case that the taxpayer had sold company shares and obtained an exemption from taxation by means of reinvestment of the obtained amount (article 38.2 of the Spanish Income Tax Law), the deductible base will only consist on the part EXCEEDING THE REINVESTMENT.

The amount of the shares acquired with the balance of a company saving account will not form part of the deduction base (transitory provision 28ª of the Spanish Income Tax Law). Note that company saving accounts were suppressed on January 1^st 2015.

The deduction percentage is 30%.

Requirements for the application of the deduction

·         Requirements applicable to the entity (article 68.1.2 of the Spanish Income Tax Law)

o   Having the legal form of Corporate Company, a Limited Company, a Laboral Corporate Company or a Laboral Limited Company (Corporate Tax Law, Royal Decree Law No. 1/2010, of 2^nd July, and Laboral Corporate Law No. 4/1997, of 24^th March)

o   Undertaking an economic activity. This excludes fixed and movable assets referred in article 4.8.dos.a) of Law No. 19/1991, of 6^th June about Property Tax.

o   Turnover not exceeding 400.000 €.

 

·         Requirements of shares (article 68.1.3 of the Spanish Income Tax Law)

o   Shares to be deducted must have been acquired at the time of the incorporation of the company or at the time of a capital increased taking place in the 3 years following the constitution.

o   Shares must be held by the taxpayer, at least, for 3 years and at the most for 12.

o   Direct or indirect participation of the taxpayer, together with the one owned at the same company by the spouse of the taxpayer or any relative of the taxpayer in 2nd grade (in direct or collateral line) may not exceed 40% of the share capital.

o   The activity of the entity may not be the same previously exercised by the taxpayer.

 

·         Formal requirements (article 68.1.5 of Spanish Income Tax Law)

o   Certification with the identification of shareholders, percentage and period.

e.g.: Let’s suppose that in January 2018 a taxpayer invests 70.000€ in a recently incorporated company which fulfils all deduction requirements. The máximum amount to be deducted would be the following: ·         Deduction in the total tax liability which corresponds to the Central State o   Maximum base: 60.000€ o   Deductions amount: 60.000 x 30% = 18.000€ ·         Deduction in the total tax liability which corresponds to the Regional Government o   Deductible investment: 70.000 – 60.000 = 10.000€ o   Amount of the deduction: 10.000 x 20% = 2.000€

 

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