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Main tax changes introduced by Royal Decree-Law 7/2021, of April 27, on the transposition of European Union directives

VALUE ADDED TAX

Royal Decree-Law 7/2021, of 27 April, transposing European Union Directives in the areas of competition, anti-money laundering, credit institutions, telecommunications, tax measures, prevention and repair of environmental damage, movement of workers in the provision of transnational services and consumer protection, introduces the following amendments to Law 37/1992, of 28 December, on Value Added Tax:

A. E-commerce

The tenth article of RD-Law 7/2021 incorporates into our internal regulations the Directive (EU) 2017/2455 of the Council, of December 5, 2017 and the Directive (EU) 2019/1995 of the Council of November 21, 2019 which concludes the regulation of the VAT treatment of electronic commerce.

The transposition of the first part of Directive 2017/2455, which entered into force on January 1, 2019 , was incorporated into our internal legal system by Law 6/2018, of July 3, on the General State Budget for the year 2018 and entailed, in relation to the services provided by electronic means, telecommunications and radio and television broadcasting:

  • The establishment of a common threshold at community level of up to 10,000 euros per year which allows that, as long as this amount is not exceeded, services provided by micro-enterprises established in a single Member State will be subject to VAT of the Member State of establishment of the provider.

  • Application of the billing regulations existing in the Member State of identification of the supplier benefiting from the special one-stop shop regimes.

  • Provide for the use of the special one-stop-shop schemes by traders or professionals not established in the European Union, but registered for the purposes of VAT in a Member State.

These amendments remain in force and will also apply to transactions to which the one-stop shop applies.

The transposition of the second part of Directive 2017/2455, whose rules are applicable since 1 July 2021 , introduces important changes in the area of taxation of supplies of goods and services which, generally contracted via the internet and other electronic means by Community end consumers, are sent or provided by entrepreneurs or professionals from another Member State or a third country or territory.

These operations are subject to VAT in the Member State of arrival of the merchandise or of establishment of the recipient, thereby achieving:

  • Increasing tax revenues, reducing revenue losses and tackling cross-border trade fraud.

  • Ensuring fairness in consumer purchasing decisions by protecting competition between EU and non-EU suppliers.

  • Reducing administrative burdens and VAT management costs for operators.

The tax management of electronic commerce in VAT is based on the expansion of the special single window regimes that become the specific procedure for the management and collection of the VAT accrued by these operations to community level. Also, for the first time, the owners of the digital interfaces that are facilitate e-commerce are involved and become collaborators in the collection, management and control of the tax.

  1. Definition of two new categories of goods (articles 8.Tres and 8 bis VAT Law).

    In order to clearly define the scope of the one-stop shop, two new categories have been defined in terms of the supply of goods:

    • Intra-Community distance sales of goods: supplies of goods dispatched or transported by the supplier from one Member State to another, the recipients of which act or have the status of final consumers. The goods must not be new means of transport or goods undergoing installation and assembly.

    • Distance sales of goods imported from third countries or territories: supplies of goods which have been dispatched or transported by the supplier from a third country or territory to recipients who act as or have the status of final consumers established in a Member State. These operations are separate from the recipient's importing of the imported goods. The goods must not be new means of transport or goods undergoing installation and assembly.

  2. Removal of the exemption on imports of low-value goods (Article 34 VAT Law).

    The exemption on imports of low-value goods currently applicable up to a total value of EUR 22 has been removed, meaning that imports of goods that do not benefit from the one-stop shop will have to pay VAT on imports.

  3. VAT exemption on imports declared through the single window (article 66.4 LIVA).

    In order to facilitate the application of the special import one-stop shop scheme (IOSS) and to avoid double taxation, a VAT exemption has been established for imports of goods to be declared under this special scheme at the time of import.

    The seller, or the intermediary acting on their behalf, must provide Customs with the individual IOSS identification number assigned at the time of filing the Customs import return at the very latest.

    only applies to shipments whose intrinsic value does not exceed 150 euros , excluding products subject to excise duty.

  4. Place to which goods are delivered (Articles 68 and 73 VAT Law).

    Intra-Community distance sales of goods will be taxed in the Member State where the recipient receives the goods .

    However, they will be taxed at the place of commencement of transport when these sales are made by entrepreneurs established in a single Member State and their value, together with the services provided by electronic means, telecommunications and radio and television broadcasting carried out in the Community, do not exceed a common threshold at Community level of 10 000 euros. In this case, business owners may choose to apply taxation at the destination.

    The supply of goods subject to excise taxes, when the recipients are persons whose intra-Community acquisitions of goods are not subject to excise taxes pursuant to Article 14 VAT Law, shall in any case be taxed at the destination.

    distance sales of goods imported from third countries or territories will be taxed in the Member State of arrival of the dispatch or transport when the special single-window import regime is applied.

  5. Place where services are provided (article 70.One.4 and 8, article 73 LIVA).

    The common EU-wide threshold of EUR 10,000 applied in the case of business owners established in a single Member State to allow taxation of electronic, telecommunications and radio and television broadcasting services in the Member State of establishment has been extended to include the value of intra-EU distance sales made.

  6. Digital interfaces: online platforms, portals and marketplaces (Articles 8.bis, 20 bis, 75, 94.One.1.c and 166 bis LIVA).

    To ensure VAT income and reduce the administrative burdens of suppliers, tax administrations and end consumers themselves, it must be understood that business owners or professionals who own a digital interface have received and delivered in their own name the goods when they facilitate(1) the following sales:

    1. Distance sales of imported goods from third countries or territories in shipments whose intrinsic value does not exceed 150 euros.

    2. Deliveries of goods within the Community by a supplier not established in the Community to final consumers.

      This provision has important tax implications:

      • Those responsible for digital interfaces are considered as taxable persons.

      • Two deliveries of goods take place: one from the supplier to the owner of the interface and one from the owner of the interface to the end consumer. The accrual of both deliveries occurs when the customer’s payment is accepted.

      • The transport of goods is linked to the delivery by the owner of the interface to the end consumer.

      • The delivery of the goods deemed as having been made by the supplier to the owner of the interface is exempt from VAT and does not limit the right for a deduction of input VAT by those performing the delivery.

      • The owner or person responsible for the digital interface may make use of the special one-stop schemes for the return-settlement of VAT arising on these transactions for which they are considered the taxable person, even in the case of domestic supplies to end consumers in the same Member State in which the goods are stored.

    Business owners or professionals who own a digital interface will have the following registration obligations:

    1. When they facilitate the delivery of goods or the provision of services and do not have the status of a taxable person : registration of these transactions, the content of which shall comply with Article 54(c)(2) of Regulation (EU) No 282/2011, of 15 March 2011, of the Council and which shall be made available electronically, upon request, to the Member States concerned. This register shall be maintained for a period of ten years.

    2. When facilitate the delivery of goods and have the status of a taxable person or when they participate in the provision of services by electronic means for which they are considered to act on their own behalf:

      • The registers provided for in Article 63(c) of Regulation (EU) No 282/2011 if the business makes use of the special one-stop-shop schemes.

      • The records established in article 164.One.4 LIVA if they do not comply with the single window.

  7. Special one-stop-shop schemes

    (Chapter XI of Title IX VAT Law).

    Three new special schemes for VAT returns and settlements in relation to supplies of goods and services to end consumers by businesses and professionals, generally not established in the Member State to which the transactions are subject, are included, replacing and extending the existing special schemes for electronically supplied services, telecommunications and radio and television broadcasting services:

    1. External arrangements of the Union (OSS) . Applicable to services supplied by businesses or professionals not established in the EU to end consumers.

    2. Union Regime (OSS) . Applicable to the following operations:

      • services provided by businesses or professionals established in the Community but not in the Member State of consumption to end consumers.

      • intra-Community distance sales of goods.

      • internal supplies of goods attributed to owners of digital interfaces facilitating the delivery of these goods from a supplier not established in the EU to the end consumer.

    3. Import regime (IOSS) . Applicable to distance sales of goods imported from third countries or territories, which may be used, directly or through an intermediary established in the Community, under certain conditions, by entrepreneurs or professionals who make distance sales of goods imported from third countries or territories in shipments whose intrinsic value does not exceed 150 euros , with the exception of products subject to special taxes.

    These schemes have the following characteristics:

    • They will allow, by means of a single declaration-settlement presented electronically to the tax administration of the Member State for which they have opted or which applies (Member State of identification), for the businessman or professional can enter the VAT accrued for all their operations carried out in the Community (consumer Member States) for each quarter or calendar month to which the special regime applies, in each case.

    • When Spain is the Member State of identification, the entrepreneur or professional will be obliged to declare to the Spanish tax authority the start, modification or cessation of his/her operations and will be identified by means of an individual identification number assigned by the same.

    • Businesses and professionals must keep a record of the operations included therein for ten years, which will be available to both the Member State of identification and the Member State of consumption. They shall also be required to issue and provide invoices in relation to the transactions declared under the special schemes.

    • They will not be able to deduct input VAT to carry out their operations in the aforementioned declarations-settlements. In the case of traders and professionals not established in the territory where the tax applies, who do not submit self-assessments to the Spanish tax authorities for other transactions, they may apply for a refund of these amounts following the procedure provided for in Articles 119 and 119a of the VAT Law, without enforcing the requirement of reciprocity of treatment in the case of traders or professionals not established in the EU.

  8. Special modality for VAT returns and payments in relation to imports (Article 167a VAT Law).

    When the trader or professional has not opted to make use of the special scheme applicable to distance sales of imported goods, they may apply this special return complying with the following requirements:

    • The intrinsic value of the shipment does not exceed EUR 150.

    • The goods in question are not subject to excise taxes

    • The end-use of the shipment or transport is the territory to which the tax applies.

    In these cases, the recipient of the imported goods will be liable for the payment of VAT, but the person presenting the goods for clearance at Customs will collect the tax from the recipient and pay the VAT collected through a special form of return corresponding to the imports made during the calendar month.

    These imports shall be taxed at the general rate.

B. Tax rate of 0% on the supply, import and intra-community acquisition of medical equipment

The first Additional Provision of RD-Law 7/2021, effective from May 1, 2021:

  • Maintains until December 31, 2021 the application of the zero percent tax rate to domestic deliveries, imports and intra-Community acquisitions of medical supplies to combat COVID-19, the recipients of which are public entities, hospitals and private social entities.

  • Update the list of assets to which this measure applies in its annex

Please note that these operations will be documented in the invoice as exempt operations.

(1) In accordance with Article 5b of Implementing Regulation (EU) No 282/2011, "facilitating" the use of an electronic interface in order for a customer and a supplier offering goods for sale through the electronic interface can establish a contact that results in a delivery of goods through that electronic interface to said customer.(Back)