New regulations for 2018

Law 6/2018 of 3 July on General State Budgets for 2018 (BOE of 4 July)

The Official State Gazette of Wednesday, July 4, 2018 published Law 6/2018, of July 3, on the General State Budget for the year 2018, which introduces the following changes to Law 37/1992, of December 28, on Value Added Tax:

• Internal exemptions. Services provided by unions, groups or autonomous entities, including Economic Interest Groups (AIEs) to their members (art. 20.One.6 LIVA)

  With effect from 1 January 2019 and indefinitely, in order to adjust internal regulations to European Union law, article 75 of the LPGE 2018 excludes from the exemption relating to services provided directly by unions, groupings or autonomous entities to their members, when these are entities that carry out the exempt activities referred to in numbers 16, 17, 18, 19, 20, 22, 23, 26 and 28 of article 20.One LIVA, relating to:

  • Insurance transactions

  • stamps and paper money,

  • financial transactions,

  • lotteries, betting and gambling,

  • real estate transactions (supply of rural land and other land that cannot be built on, second and subsequent supplies of buildings, land an housing leases)

  • copyright and

  • services rendered and goods delivered by political parties.

  In this way, the exemption will only apply, in accordance with the jurisprudential doctrine (CJEU rulings of September 21, 2017, case C-605/15 "Aviva" and C-326/15 "DNB Banka"), to the AIEs whose members carry out activities of general interest that are exempt from VAT (health care, social assistance or education, among others).

• Exemptions to exportations of goods (art. 21.2.A).a) LIVA)

  With effect from July 5 and valid indefinitely, article 76 of the LPGE 2018 provides that VAT reimbursement to travelers residing outside the Community will be made whoever be the amount of the invoice , eliminating the requirement that said amount must exceed 90 euros.

• Exemptions in operations similar to exports (art. 22.Thirteen LIVA)

  With effect from 5 July and indefinite validity, article 77 of the LPGE 2018 establishes the application of the exemption provided for the transport of passengers and their luggage by air from or to an airport located outside the spatial scope of the tax, to connecting flights when they are covered by a single transport title.

  To this effect, it is incorporated into the regulations of the current doctrine of the Directorate General for Taxes (consultation No. V0937-18, of 10 April 2018 and V0406-18, of 16 February 2018, among others).

  Example: a Madrid-Barcelona flight connecting with a Barcelona-Paris flight will be exempt if both flights are documented with a single transport document.

• Reduced tax rates. Admission to movie theaters and assistance services for dependent persons (art. 91.One.2.6 and 91.Two.2.3 LIVA)

  With effect from July 5 and indefinite validity , article 78 of the LPGE 2018:

  • Reduction of the tax rate applicable to the entry into cinemas, which decreases from paying 21% to 10%.

  • Extends the application of the 4% for telecare services, home help, day and night centres and residential care for dependent people when they are granted monetary benefits that cover over 10% of the cost, instead of requesting 75%.

• Electronic, telecommunications and radio and television broadcasting services

  With effect from January 1, 2019 and valid indefinitely, article 79 of the LPGE 2018 introduces the following modifications to the LIVA, as a consequence of the recent approval of the Directive (EU) 2017 /2455 of the Council of December 5, 2017, amending Directive 2006/112/EC and Directive 2009/132/EC:

  1. Localization rules (art. 70.One.4 and 8 LIVA)

     In order to reduce the administrative and tax burdens that micro-enterprises established in a single Member State that provide these services occasionally to final consumers in other Member States (B2C operations) are taxed. In the Member State of consumption, a common threshold at Community level of 10,000 euros (excluding VAT) is established, which, if not exceeded, will mean that these services are subject to VAT in their Member State of establishment , although they may opt for taxation in the Member State where the recipient of the service is established.

     In this way, telecommunications, broadcasting, television and electronic services provided by community entrepreneurs to individuals established in the Spanish territory of application of the tax (TAI) will be taxed in said territory in any of the following cases :

     • The service provider is established in more than one member state.

     • The service provider is established in a single member state and the total amount of the services rendered of this type to end consumers in other member states has exceeded €10,000 (before VAT).

     • The service provider is established in a single member state and the total amount of the services rendered of this type to end consumers in other member states has not exceeded €10,000 (before VAT), but they opt for taxation in the TAI.

     In all these cases, the taxpayer may opt to be taxed through the Mini One-Stop Shop (MOSS) in the member state where the taxpayer is identified.

     On the other hand, telecommunications, broadcasting, television and electronic services provided by entrepreneurs established in the Peninsula or the Balearic Islands to individuals in other Member States will be taxed in the Spanish territory of application of the tax (TAI) when the following requirements are met:

     • The service provider is established only in the TAI.

     • The amount of these services rendered to end consumers in other member states is under €10,000 (before VAT)

     • The provider has not chosen to be taxed in the member state of consumption (the option must include at least two calendar years).

     Example: A business established only in Spain renders electronic services to national clients. In June 2019, it provided services to end consumers established in Germany for an amount of 5,000 euros.

     These services are located in the Spanish tax territory as the services rendered to EU customers other than domestic customers do not exceed €10,000. However, the company may opt to pay tax in Germany, registering and submitting its VAT tax returns corresponding to these services in Spain through the One-Stop Shop service (MOSS)

  2. Special scheme applicable to telecommunications, broadcasting or television services and services provided electronically by employers or professionals not established in the Community (art. 163 18.2.a) and 163 19.1. a of the LIVA)

     To assist the voluntary fulfilment of tax obligations and the possibility of adhering to the simplified systems of one-stop shops, the currently existing limitation that businesses or professionals not established in the Community but registered for VAT purposes in a member state, for example because they occasionally perform operations subject to VAT in that member state, cannot use either the special system applicable to businesses established in the Community or the special system applicable to those not established in the Community, is eliminated, meaning that they may use the latter.