Spain - VAT law changes 

Summary of VAT law changes

• Transfers of company shares when the purchasing person / entity realizes an indirect ownership of a real estate through the control of the purchased entity - The new law includes a measure that triggers the anti-avoidance provision on transfers of shares representing a company whose assets mainly (i.e., more than 50%) consist of real estate when the purchaser acquires control of the company. Previously, such transactions were subject to the transfer tax. However, with the new law, the anti-avoidance rule (which aims at situations addressing the avoidance of taxation) applies and depending on the circumstances of the transfer and on the type of tax that was intended to be avoided, the transaction can be subject to either transfer tax or VAT. The rule applies to real estate located in Spain, and not connected to business activities.
• Taxpayers in bankruptcy - Modifications are made with regards to taxpayers who are in a “bankruptcy situation.” The changes concern the timing of certain tax credits, when prior invoices are to be corrected, when the rectified invoices are to be reported, and which tax returns are to be filed.
• Reverse charge mechanism - There are three new situations subject to the reverse charge mechanism: (1) situations when the VAT exemption for non-buildable lands or second / subsequent real estate transfer is waived by the supplier; (2) deliveries of real estate under warranty execution; and (3) execution of works on real estate assets, provided that certain requirements are met.
• Transaction assimilated to an import - A new infringement procedure is added to Spain’s VAT law for missing or incorrect submissions of tax returns when the transaction ought to have been reported; a 10% penalty applies on the amount of VAT due.

For more information, contact a tax professional with the KPMG member firm in Spain:

Natalia Pastor Caballero

+34 91 456 34 92

Montserrat Montoya

+34 93 253 29 03