New VAT cash regime in Spain

Under the new VAT cash accounting scheme in Spain, business would report output and input VAT when they get paid by their customers or pay their suppliers. In this way, they can avoid having to pay to the Tax Office the VAT charged on unpaid invoices.

This new VAT cash regime would be applicable to tax payers whose turnover during the previous calendar year did not exceed 2,000,000 euros.

According to this new tax scheme the VAT shall be payable at the time of the total or partial payment of the price on  the amounts actually received from customers. However, if an invoice remains unpaid by  December 31 of the year  following the date of the invoice, then the VAT charged on that invoice must be paid to the Tax Office anyway. For instance, the VAT of invoice dated in 2017 must be paid to the Tax Office by December 2018 at latest.

The invoice must be issued and delivered at the time when the transaction takes place, but the tax is to be paid to the Tax Office only when it is collected from the customer.

On the other hand, where the tax payer is entitled to apply this scheme, the recipient of the invoice could only deduct the input VAT charged at the time of the full or partial payment of the price, on the amounts actually paid, or if this has not occurred, the 31 of December of the year immediately following the day on which the operation was carried out.

Therefore, as from January 1st, 2014 it would be very important to be aware if the supplier enjoys the new VAT special regime, so as not to anticipate the deduction of input VAT on unpaid invoices. In this respect, the invoice must contain a mention about his VAT status.

For a detailed explanation of this matter we suggest the Tax Office note on this scheme.

At Tax Partner we provide VAT services in Spain since 1996. Please feel free to contact us