Possibility of issuing an invoice over a year after the date of accrual if there is prior agreement


Spanish Supreme Court Judgment 2/2015 of 19 January 2015, in response to an appeal by the State attorney representing the Institute for Housing of the Armed Forces (INVIFAS).

In 2007 INVIFAS sold homes the soldiers who occupied them, stating in public deeds of sale that the transaction was exempt from VAT considered applicable the exemption for second or subsequent transmissions. Furthermore, the contract provided that would be assumed by the purchaser the amount of taxes and other expenses that arise directly or indirectly from the transmission of the house.

Buyers proceeded to pay the Transfer Tax.

However, the Ministry of Defence submitted a tax consultation before the Spanish General Tax Directorate, which was resolved in the sense that it would not apply the exemption from VAT so, the transmission of houses would be subject and not exempt from VAT.

Then, buyers were refunded the Transfer Tax previously paid by mistake. The Spanish Tax Authority claimed the VAT quotas to INVIFA and this entity issued the corresponding invoices to buyers requesting the VAT, however, buyers, refused to pay the VAT claiming that INVIFAS had exceeded the legal deadline for issuing the invoice as provided in article 88 of the Spanish VAT Law (one year from the date of accrual).

The Court rules in favour of INVIFAS since the Spanish Civil Code, articles 1258 and 1091 provides for compulsory and binding force of contracts, while Spanish General Tax Law, article 17.5, analysing the legal relationship to fiscal matters, says that the elements of the tax liability cannot be modified by acts or agreements of individuals who do not have effect before the Government, notwithstanding their private legal consequences.

Therefore, the binding on the parties to the agreement in that clause strength is not based on the application of administrative rules on the possible charge of VAT on buyer’s, regardless of the resolutions that have been issued about it, nor these can be free of obligations by the mere fact that initially understood that the sale was subject to transfer tax and subsequently determined that it was not subject to this tax but to VAT.

Consequently, the Court gives precedence to the contract against any incidence of administrative nature, forcing buyers to pay the corresponding VAT quotas to INVIFAS.

For further information please contact us at info@diligens.es

STS de 19 enero 2015

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