SPAIN: COVID-19 VAT IMPLICATIONS

SPAIN – Update 12th August

Spain Extends 0% VAT Rate for Products and Equipment to Combat COVID-19

Spain has published Royal Decree-Law 27/2020 of 4 August 2020, which provides for an extension of the temporary 0% VAT rate introduced by Royal Decree-Law 15/2020 for different medical and sanitary products and equipment used to combat COVID-19. Previously scheduled to expire 31 July 2020, the temporary 0% VAT rate is now extended to 31 October 2020. The list of qualifying products and equipment in the annex to the Royal Decree-Law has also been expanded with retroactive effect from 23 April 2020 (date of entry into force of Royal Decree-Law 15/2020).

Royal Decree-Law 27/2020 also includes certain other measures, including tax measures for the UEFA Women’s Champions League final 2020. This includes tax exemptions in relation to the event.

Source Credit – Orbitax, VATupdate.com

SPAIN – Update 23rd June

Spain Allows Tax Procedures to be Held Digitally Due to COVID-19

Spain has published Royal Decree-Law 22/2020 of 16 June 2020 in the Official Gazette. While the Decree-Law mainly concerns the regulation of a COVID-19 Fund, it also includes amendments to the General Tax Law (Law 58/2003) to allow tax procedures between the tax administration and taxpayers to be carried out through digital systems, including videoconference or another similar system.

Such systems must allow bidirectional and simultaneous communication of images and sound and guarantee the safe transmission and reception of documents that, where appropriate, reflect the result of the actions carried out. The use of such digital systems will be determined by the tax administration and requires the agreement of the taxpayer in relation to their use.

Royal Decree-Law 22/2020 entered into force on 17 June 2020, the date it was published.

Source Credit – Orbitax

SPAIN – Update 7th May

Spain allows VAT registrations submitted online

Spanish VAT number applications can be submitted online. Following the latest developments on tax simplifications due to Coronavirus, Spain introduced a mechanism to allow businesses to obtain a VAT number via an electronically submitted application.

 This option was introduced as a temporary simplification, although it is possible that it remains in place following the end the quarantine period.

Source Credit – Marosa

SPAIN – Update 6th May

Canary Islands – Tax reliefs for medical goods and activities

On 23 April 2020, the Canary Islands Governing Council approved a decree-law establishing zero import duty and VAT on the import and delivery of health goods for treatment of COVID-19. The rule will be in force until 31 July 2020, and follows a measure introduced in Spain.

Source Credit – cope.es

SPAIN – Update 30th April

0% VAT rate on PPE’s supplied to Public Law entities (hospitals, etc) till July 31, 2020

On April 22 was published in the Official Gazette the latest battery of economic measures approved by the Government to deal with the Covid-19 crisis, approved by the Royal Decree-Law 15/2020, of complementary urgent measures to support the economy and employment.

Hereunder we comment on the tax measures contained therein, from Article 8 to Article 12.

1. VAT

• Between April 23 and July 31, 2020, a VAT rate of 0% will be applied to supplies of goods, imports and intra-community acquisitions of goods that are listed in the Annex to the Royal Decree. To apply this special rate of 0%, the recipient must be a Public Law entity, a clinic or hospital or a private social entity to which the exemption provided in article 20.Three of the VAT Law does apply.

The goods included in the Annex to the Royal Decree to which this 0% rate will apply are basically medical goods (medical devices, consumable medical supplies, masks, gloves, facial protections, etc.)

The application of this 0% rate will not limit the taxpayer’s right to deduction, although they will be documented on the invoice as an exempt operation.

• A reduced rate of 4% will be applied to books, newspapers and magazines in electronic format.

2. Corporate Income Tax

• Taxable persons who could benefit from the extension of the deadline for the submission of tax returns until May 20 (those whose yearly turnover did not exceed 600,000 Euro in 2019), are entitled to settle the first and second instalment of the Corporate Income Tax of 2020 through the modality set forth in article 40.3 of the CIT Law, that is, through the modality of base calculation. If they already settle the first instalment of 2020 before the approval of this Royal Decree, they can rectify the tax return.
• Likewise, taxpayers who could not take advantage of the extension of the deadline to file the first instalment of 2020 until May 20, and whose yearly turnover in 2019 did not exceed 6,000,000 euro, are entitle to settle the second instalment of 2020 through the modality of article 40.3.
• This option will not be applicable to tax groups that apply the tax consolidation regime. On the other hand, if a taxpayer decides to apply this modality, it will be linked to this method for the entire period of 2020.

3. Personal Income Tax

• Taxpayers who determine the net income on economic activities by the objective estimation method (modules) and who renounce to the application of this method before the deadline to file the first payment on account of 2020, that is, on May 20, will be entitled to apply again the module method for 2021 if they meet the requirements to be able to apply it and revoke the renounce during term provided in article 33.1 of the Regulation. Likewise, the resignation will be understood as revoked if they submit the first payment on account of 2021 with the objective estimation method (modules) in due time.
• Taxpayers who settle their income of economic activities by the objective estimation method and those who are in the simplified VAT regime, shall not count as days of activity the calendar days in which the state of alarm is declared.

Source Credit – Diligens

SPAIN – Update 29th April

Further measures to address the economic and social impact of COVID-19

On Wednesday, 22 April 2020, the Spanish government approved urgent additional measures to address the economic and social impact of COVID-19 (Royal Decree-Law 15/2020). The latest Royal Decree also amends Royal Decree-Law 8/2020 of 17 March 2020 and Royal Decree-Law 11/2020 of 31 March 2020, that, among other things, established deadline extensions on tax proceedings.

According to the latest regulation, the deadlines for certain tax obligations, which had not been concluded or communicated as of 18 March 2020, will be extended until 30 May 2020.

In addition, the statute of limitations will be suspended in the period from 18 March 2020 to 30 May 2020. Despite these extensions, it will be possible to answer any outstanding information requests and to submit pleadings before 30 May 2020.

As well as providing flexibility for taxpayers, the current legislation also provides more flexibility for the Spanish Tax Authorities. In this context, the period between 18 March 2020 and 30 May 2020 will not be taken into account for the purposes of the maximum time period the Tax Authorities have to issue a final resolution in a tax audit, penalty procedures and administrative appeals. However, the Decree does not prohibit the Spanish Tax Authorities from carrying out any essential procedures during this period.

The time period for filing appeals for reversal (recurso de reposición) or economic-administrative claims, will start from 30 May 2020, where the time period had already started running and had not ended on 13 March 2020.

From 23 April to 31 July 2020, a 0% VAT rate is applied to certain supplies of goods, imports and intra-community acquisitions of certain medical equipment (e.g. intensive care ventilators) where the recipients are public-law bodies, clinics or hospitals, or private entities of social character. It is important to note that these transactions will not limit the right to deduct the VAT borne by the taxable person carrying out the transaction.

As from 23 April, the 4% reduced VAT rate is applicable to books, newspapers and magazines that are considered to be supplied electronically. The current legislation also makes it easier for most corporate taxpayers to opt for a special fractioned payment regime (compulsory for taxpayers with turnover of more than EUR6 million), which calculates taxes due based on taxable income in the first three, nine, or 11 months of a calendar year.

Source Credit – DLA Piper

SPAIN – Update 28th April

Extended VAT return deadline of 20 May further extended to 30 May 2020

 The extended VAT return deadline of 20 May (see below) has been further extended to 30 May 2020.

Import VAT and customs may be delayed on application for payments between €100 and €30,000 for non-large taxpayers (below €6m annual turnover). This facility will be in place until 30 May. Any deferred taxes will be interest-free for 3 months, and must be settled by at least 6 months.

Source Credit – Richard Asquith – (Avalara)

SPAIN – Update 21st April

Measures in response to COVID-19

Spanish Government has approved Royal Decree Law 14/2020, of 14 April 2020, which establishes an automatic extension of deadlines in case of SMEs (whose turnover volume has not exceeded 600,000 € in 2019) for the filing and payment of all tax returns (including VAT returns) with a deadline between 15 April and 20 May.

Deadlines in case of all these tax returns will be extended up to next 20 May 2020.
Entities applying grouping schemes for CIT or VAT grouping will NOT be able to benefit from this measure irrespective of their turnover volumes.

This measure will NOT affect Customs Declarations ether.

In case of tax returns to be paid by taxpayers through direct debit the above mentioned deadlines as from 15 April will be extended up to 15 May only (not 20 May since direct debit obliges the tax Authorities to previously run verification on taxpayers’ bank accounts).

Source Credit – Michaela Merz

SPAIN – Update 17th April

The Spanish Tax Authorities have extended the VAT reliefs that are in place as a result of the Covid-19 crisis. The deadline for the Q1 2020 VAT return for businesses with a turnover below €600,000 in Spain in 2019 have been automatically extended to 20 May 2020 from 20 April 2020. The 20 May 2020 is the deadline for both submission and payment. Unlike the previous deferral scheme, there is no need to apply for the extension. As there is no need for an application, there is no requirement for a Spanish bank account which will make the relief more easily accessible for non-resident businesses.

Source Credit – Accordance VAT

SPAIN – Update 17th April

Extension of deadlines for the filing and payment of taxes for small companies

Royal Law-Decree 14/2020 of 12 April, (published at the Official Gazette of the 15th of April) establishes an extension for the filing and payment of those returns with pending deadlines at the date of its publication, which will be extended until the 20th of May.

So, the new deadline for VAT returns (recapitulative returns could also benefit) corresponding to April or the first quarter of 2020 will be the said 20th of May. As an exception, for the case that the system adopted for the payment of the VAT return is its domiciliation at a Spanish bank account the new extended deadline will be the 15th of May. However, this measure will only affect companies with a volume of transactions during the year 2019 under 600,000 Euros. When determining this figure, it must be remembered that according to the criteria of the Spanish General Tax Directorate:

• Exempt transactions, in any case, and transactions not subject to Spanish VAT when related to a Spanish permanent establishment will have to be taken into consideration.
• On the other hand, intracommunity acquisitions and purchases eligible to reverse charge will have to be excluded. As resulting from the previous comment, supplies eligible to reverse charge (I.e. those made by non-residents companies without a PE in Spain) should also be excluded.

In any case, it should also be remembered that the extension of deadlines would only affect to those case where the tax management correspond to the central government. So, companies operating in the Canaries, where IGIC instead of VAT applies, or through a PE in the Vasque country or Navarre where special regulation applies should attend to the specific deadlines contemplated therein.

Source Credit – IVAconsulta

SPAIN – Update 9th April

Closes tax office on coronavirus epidemic

Import VAT and customs duties six-month deferments are now possible for amounts between €100 and €30,000. There will be no interest charges. Applications must be made via the customs declarations. This is only available to non-large companies, with turnover below €6million per annum.

Update: The Spanish Canary Island tax office confirmed on 23 March that VAT (IGIC return) is delayed from 20 April to 1 June.

15 March. Spain had already announced last week VAT and other tax payment holiday for small businesses who apply for relief for the coronavirus (Covid-19) outbreak. The scheme is not available for large businesses (above €6m turnover) or if the Value Added Tax due is above €30m
Royal Decree-Law 7/2020 of March 12 contemplates a series of measures to make deferrals more flexible for SMEs and the self-employed. Any applicant must provide details of:

The applicant who intends to take advantage of the flexibility established in the Royal Decree Law must pay special attention to the following fields:

• Type of guarantees offered
• Proposal of repayment terms; number of deadlines
• First instalment date: the date six months from the end date of the ordinary deadline for submitting the self-assessment must be included (for example, the monthly self-assessment of VAT MOD 303 for the month of February expires on the 30th March, so the date to be included would be 30 Sept 2020).
• The first 3-months of deferment will be exempted from the normal 3.75% penalty interest.

Source Credit – Richard Asquith (Avalara)

EUROPEAN UNION / SPAIN – Update 8^th April

COVID-19: European Commission grants exemption of import duties and VAT on the import of goods

On April 3, 2020 the European Union published Decision (EU) 2020/491, granting relief from import duties and VAT exemption on importation granted for goods needed to combat the effects of COVID-19. This Decision resulted from the requests sent by the member states since on January 30 the outbreak was declared a public health emergency.

Source Credit – Garrigues

SPAIN – update 7^th April

Canary Islands: Postponement of IGIC and duties on imports

Unlike to the “no action policy” of the Spanish central government, as regards VAT obligations under the COVID-19 crisis, when speaking of the regional indirect tax of the Canary Islands (the so called IGIC), the autonomous government are adopting specific measures affecting the managing of such indirect tax.

We already commented the extension of deadlines for IGIC returns, form 420, for the  1st quarter 2020 that are to be filed until June 1, 2020 (the original deadline being April 20, 2020. However, such rule does not apply to big companies that are obliged to file IGIC monthly returns (in principle, those with a turnover exceeding 6 million Euros).

The autonomous government has now extended 30 calendar days the payment of the import debts, including IGIC, that are due in the month of April 2020, to companies benefiting from the deferred payment procedure (i.e. those companies that have guaranteed the payment of such debts). Since the normal payment period is 60 calendar days, so now the payment period will be 90 days. Such extension is granted without the obligation to pay any interests.

For example, if the dispatch of the import of goods is dated in February 15^th, 2020, a company subject to the deferred payment procedure would normally have to pay the import debts in April 15^th, 2020 (60 calendar days), now the payment will be made in May 15^th, 2020.

Source Credit – ivaconsulta

SPAIN – Update 31st March

• Regarding certain tax procedures, deadlines that would have started to run before March 18, 2020, are extended to April 30, 2020. Deadlines which started from March 18, 2020 are automatically extended until May 20, 2020 unless the period granted by the general rule is longer. This measure does not affect tax debts resulting from tax returns and self -assessments.
• No enforcement of guarantees on real estate will take place until 30 April 2020.
• Deeds formalizing contractual novation of loans and mortgages, shall be exempt from the Stamp Duty quota for notarial documents as a consequence of the economic impact of COVID -19 .
• The period between 18 March and 30 April is not computed for the purpose of the maximum duration of the procedures of the application of taxes, tax penalties and tax appeal procedures according to the law. It shall not count for the purposes of the deadlines or the statute of limitation periods during which the Spanish Tax Authorities has the right to determine the tax liability and to demand payment of assessed and self -assessed tax liabilities, nor of the rights to request and obtain refunds under the regulations of each tax, refunds of unduly paid taxes and reimbursement of the cost of guarantees.
• Deferral of tax payments for a period of 6 months, upon request, without interest during the first 3 months; conditions: the debtor is a person or entity with a turnover not exceeding EUR 6,010,121.04 in 2019 and the debts correspond to tax returns and self -assessments for which the deadline for submission and payment is from March 13, 2020 to May 30, 2020, both included, provided that the applications are submitted up to that date for a total amount of less than EUR 30,000. Such deferral may also be requested in relation to declarations relating to withholding taxes, VAT and CIT payments on account which, under general rules, are not subject to deferral.

On the other hand, certain municipalities have implemented specific measures for local taxes. We have highlighted the following measures:

• Town Council of Madrid has introduced a 25% rebate on real estate tax quota corresponding to FY20 for buildings destined for leisure, hotel and restaurant uses, subject to the condition of maintaining the average number of employees during such FY. Taxpayers should apply for such rebate before 15 June 2020.
• Several municipalities such as Barcelona, Valencia, and Bilbao have extended the voluntary payments of certain local taxes including real estate tax. Similarly, several autonomous regions among others Madrid, Cataluña and Aragón have extended the regular deadlines regarding regional taxes (e.g. real estate transfer tax, stamp duty tax, inheritance tax)

 Source Link here

SPAIN  ( Canary Islands) – Update 31st March

• Amendment or de-registration will have a deadline for filing up until 1st June 2020 (if the deadline for filing these declarations takes place during the pandemic)

Source Link here

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