New VAT law in Spain

Anyone who has dealings with Spanish companies will be interested to know that from 1st January 2014, Spanish Law 14/2013 of 27th September will come into force regarding support for entrepreneurs and internationalisation, a law which is similar to that already in effect in the UK and other countries.

Among other things, this new Law includes the possibility of taking advantage of the special cash accounting scheme, which is also known in Spain as cash VAT.

For anyone who pays this tax and takes advantage of this scheme, it will mean that they no longer have to pay the Inland Revenue in advance for the VAT on the invoices they have issued to their clients until this has been collected, which unlike what happened in the past (VAT accrual basis), where they had to pay the VAT whether or not they had collected payment for the invoice.

What does this mean for European companies that work with Spanish companies that join this special scheme?

For anyone whose company has an intra-community VAT number, the invoices will still not include VAT.

And what if my company has a subsidiary in Spain?

For all companies based in Spain, when they contract services or buy products from companies that have taken advantage of the special cash accounting scheme, they will have to apply the cash basis to the payment of that invoice. This means that they cannot deduct the VAT until the invoice has been paid, and they must pay the output VAT at the time of accrual.
You can view the law that has been published in the Spanish Official State Gazette (BOE) at the following address (only in Spanish):


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