Coordination with the objective estimation regime (modules) of the Personal Income Tax
In order for a taxpayer to be in the simplified regime of VATthey must be, for the same activity, in the objective estimation regime of IRPF .
Example: The section of IAE 419.1 corresponding to the economic activity “bread and pastry industries” is included in the scope of application of the objective estimation method and in the simplified special regime.
There are more activities under the objective estimation regime in IRPF than those under the simplified regime of VAT. Consequently, the activity that is taxed in the objective estimation of IRPF can only be taxed in VATin accordance with one of these three special regimes: the simplified one, the equivalence surcharge or the agriculture, livestock and fishing one.
In turn, the waiver in VATof the simplified regime, or the special regime for agriculture, livestock and fishing implies the exclusion of the objective estimate in IRPF . And the waiver of the objective estimation regime of IRPF means also waiving the simplified regime and the regime of agriculture, livestock and fishing in VAT.
In short, there is no one-to-one relationship between the simplified and objective assessment regimes, that is, although every taxpayer who is included in the simplified regime in the VATis necessarily in objective assessment in the Personal Income Tax, the reverse is not always true.
Example: a haberdashery is in modules in IRPF and in surcharge of equivalence in VAT.
System of incompatibilities in VAT regimes
GRADES:
Dark background regimes are mandatory.
(1) and (2) The regime will be compatible with the rest of the tax regimes. However, if there are activities under the simplified special regime, the REAGP is incompatible with the regimes marked with 1, but if the subject starts an activity in a Travel Agency or in Gold Investment (mandatory regimes) or in the general regime, he cannot be in the simplified regime, and neither if he starts and does not renounce activity in Used Goods or Electronic Services.
(3) If you have activities under a simplified regime and do not renounce the used goods regime, you cannot be under a simplified regime. If you are in used goods you cannot start activity under a simplified regime.
(4) If you have activities under a simplified regime and start a business as a travel agency, you cannot be under a simplified regime. If you are in a Travel Agency you cannot start activity under the Simplified Regime.
(5) If you have activities under a simplified regime and start an activity in Gold Investment, you cannot be under a simplified regime. If you are in Gold Investment you cannot start activity in the Simplified Regime.
(6) If you have activities under a simplified regime and do not renounce the Electronic Services regime, you cannot be under a simplified regime. If you are in Electronic Services, you cannot start activity under the simplified regime.
In the case of incompatibility of the simplified regime with the general regime, the exception provided for in art. 36.1.e) RIVA should be considered: "However, the performance by the taxpayer of other activities in the development of which he exclusively carries out operations exempt from the Tax by application of article 20 of its regulatory Law or leasing of real estate whose performance does not involve the development of an economic activity in accordance with the provisions of the regulations governing the Personal Income Tax will not entail exclusion from the simplified regime."
GENERAL NOTE:
When a taxpayer who was carrying out a business activity under a simplified regime begins another activity to which the general regime or a special regime incompatible with the simplified regime is applicable, during the calendar year in which the new activity was started, he will continue to pay taxes, for the activity he was already carrying out, under the simplified regime.
Example: start of an economic activity that consists of vertical work in construction, such as small construction repairs at height, sealing of joints, waterproofing of cornices, repairs and cleaning of facades and waterproofing.
The classification of the different activities in the Rates of the Tax on Economic Activities will be carried out taking into account their true material nature, and that in accordance with rule 2 of the Instruction for its application, approved together with those by Royal Legislative Decree 1175/1990, of September 28, taxpayers must register and pay taxes for each and every one of the activities that are carried out in a differentiated manner from each other and that have independent treatment within the Rates.
- Section 501.3 of the first section of the Tariffs classifies the activity of “Masonry and small construction work in general”.
- Section 922.2 of the first section of the Tariffs classifies the activity of “Specialized cleaning services (windows, chimneys, etc.)”.
In view of the above, the taxpayer who carries out the activities of small high-rise construction repairs, cornices, sealing of joints, waterproofing of cornices, cleaning of facades and waterproofing, must register for the performance of these under the headings of the first section mentioned above, that is:
- For vertical repair work, under section 501.3, or, where applicable, under section 501.1.
- For facade cleaning services, under section 922.2.
The taxpayer must register in two sections of the IAE , for vertical repair work, in section 501.3, and for facade cleaning services, in section 922.2.
Of these two activities, only the one registered under section 501.3 of the IAE rates is included, by the Ministerial Order approving the modules, within the scope of the objective estimation method of personal income tax and by the special simplified VAT##1##, while the facade cleaning service activity, section 922.2, is not included in the scope of these regimes.
Furthermore, the Personal Income Tax Regulations establish the incompatibility between direct estimation and objective estimation, and the aforementioned Regulations consider this incompatibility as a cause for exclusion from the objective estimation method.
Therefore, since the facade cleaning services activity has to determine its net income by the direct estimation method, the other activity will be excluded from the objective estimation, and the net income of the activities carried out must be determined by the direct estimation method.
As regards VAT, article 36.1.e) of the Regulations of this Tax, approved by Royal Decree 1624/1992, of 29 December, establishes as a cause for exclusion from the special simplified regime the performance of activities not covered by the special simplified regimes of agriculture, livestock and fishing or the equivalence surcharge.
In this case, the taxpayer carries out an activity (façade cleaning services) that is not included in the scope of the simplified regime and cannot be covered by any of the special regimes mentioned in the previous paragraph, so he will be excluded from this special regime for the other activity carried out, having to pay VAT, for both activities, under the general regime. (Binding consultation DGT V0791-07)