VAT changes provided in the Spanish General State Budget Act for 2016

The past October 30th was published in the Official Gazette of the State the General State Budget law 48/2015 for 2016, which includes, among other, some technical updates in the Value Added Tax.

These provisions are the following:

1. Exemption over services related to exports (article 21.5 VAT Act)

With effect from January 2015 it is expanded the exemption from VAT which covers services related to exports. These services are exempt when provided to the ones carrying out the exportation, the recipients of the goods or their customs representatives, and from January 2015 it is included freight forwarders and shipping agents as recipients who would benefit from the exemption.

2. Exemption on importation of goods to duty-free (art. 65.d) VAT Act)

From January 2016 is exempt from VAT the importation of goods which are aimed to duty free shops linked with the VAT warehouses.

3. New limits for the application of the simplified scheme and the special scheme for agriculture, livestock and fisheries (Temporary Disposal 13th VAT Act)

• Simplified regime: expands to 250,000 Euro for all activities except agricultural, forestry and livestock, during the years 2016 and 2017, the volume of income in the immediately previous year that determines the exclusion of the regime. By 2018 the limit is set at 150,000 Euro.

• For both regimes: expands to 250,000 Euro, during the years 2016 and 2017, the volume of acquisitions and imports of goods and services in the previous year, excluding those relating to real estate. By 2018 the limit is set at 150,000 Euro.

4. Sales equalization tax by civil societies

Civil societies which pass into the condition of taxpayers of the Corporate Income Tax from January 2016 and therefore cease to apply the equivalency surcharge may deduct, in the tax return of the period in which occurs the termination of the special regime, the amount resulting from applying to the acquisition value of their inventoried goods at that date, excluding VAT and the equivalency surcharge, the tax rate and surcharge of equivalence in force at that date.

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