VAT taxable base of no monetary consideration in deposit transactions and remuneration due to the attendance of Board of Directors meetings. Judgment from the Administrative Court


These transactions relate mainly to savings deposits that are paid by banks with a supply of goods instead of money-payment of the accrued interest.

Firstly, it is important to remember that, as confirmed in the present case by the Court, according to the VAT legislation, these deliveries in kind are considered transactions subject to and not exempt from VAT (as opposed to the money-payment interests that would be exempt from VAT) since they are not gifts or free deliveries by the bank, but are deliveries of goods as consideration for a financial transaction consisting of a deposit of funds. Therefore, it is not disputed in the complaint lodged to the Court the treatment for these purposes, but how the tax base is constituted in such supplies.

The dispute comes from the fact that the bank did not charge the VAT on supply of goods to its customers in return for the deposits by a commercial decision, but it declared in the VAT return as output VAT, and so did with the withholding taxes due, which were not attributed to the customer but declared by the entity. However, the inspection considered that both, the VAT and the withholding taxes, accrued but not passed on, should be part of the VAT base, being part of the consideration for the supplies, so the inspection proposed a settlement for the difference.

In this regard, the Court is quite clear on the matter and does not consider that the output VAT should be part of the tax base. It reminds the Court that the taxpayer has two obligations: to include in the tax return the VAT due and to charge it to the client, but the failure to meet the second requirement does not lead necessarily the tax to be part of the consideration. Moreover, it is not understood from the file that the remuneration to the client does include the lack of impact of the VAT, so that the determination of the tax base cannot depend on whether the taxpayer meets its formal obligation to charge or not, but the tax base does consist of the actual consideration received, which in this case is the market value of the goods, as the bank said. The same reasoning applies to the withholding taxes not passed on.

Secondly, it is solved in the judgment the decision to levy VAT by the entity as regard the compensation received by the Chairman and the General Director of the company due to assist to the meetings of the Boards of Directors of the participated entities. In this sense, while the company claims that these individuals have assisted in his own name, the inspection believes that, given its clause-time, they assist on behalf of the entity, so the amounts received belong to the entity as consequence of a provision of services subject to VAT and not exempt.

The Court is also clear about this dispute, because there is case-law of this Body which states that under the regulations of the Savings Banks, the President and the General Director of the Council should work exclusively for the company, so that payments received, other than attendance fees, should be transferred to the company on whose behalf they make that activity. Therefore, the assistance to these boards is not made by the President and the General Director in his own name but on behalf of the company, which means that it make the provision of services subject to and not exempt from VAT.

There are other issues contained in the Judgment but are not covered in this text.

A copy of the judgment, in Spanish, with number 04464/2013 is attached.

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