November, key month to opt for the deferral of VAT on imports
Last January of 2015 entered into force a new option for the taxpayers of VAT on imports of goods to defer the payment of the VAT payable on imports until the moment of the submission of the tax return (Form 303). It is enabled this mechanism for those taxable persons which are in a period of monthly VAT settlement, either for having a large entity status for the purpose of VAT or for being in one of the schemes of VAT which enables the monthly submission of tax returns.
To qualify for this deferral scheme, the rule (article 74.1 of the VAT regulation) sets, a priori, two deadlines. The first of them is during the month of November preceding the year in which should take effect the option by the deferral, while the other is at the time of the beginning of the activity by the taxpayer.
However, despite the clear wording of the regulation, the reality from a practical point of view to request this option of deferral is very different, due to the execution of the applications by the Tax Administration.
Thus, if a taxpayer is thinking of starting the activity and wish to request the option for this scheme of deferment, it will not be possible since, as at the beginning of the activity, a taxpayer is never in a monthly VAT settlement period, in so far as it is neither a large company (this will be determined in any case according to the turnover achieved during the current financial year and will have effects for the following financial year) nor can request the register in the of monthly VAT refund scheme at the beginning of the activity.
Regarding this scheme of monthly refunds, the Tax Administration, contrary to what is set in the regulation in our opinion, automatically rejects the requests filed with the commencement of the activity, although filed during the quarterly settlement period as set in the regulation of this regime, since the Administration understands that it is not in the first settlement period when can apply for the inclusion in the scheme, but once started its activity and submitted its first quarterly VAT return it will have to wait for the next quarterly settlement period for applying into the monthly refund scheme.
In conclusion, from a practical point of view, and notwithstanding the rule in this regard, with the beginning of the activity a taxpayer shall have no large entity status nor can register from the beginning in the monthly VAT refund scheme and, therefore, it has not available the option for the deferral of VAT on imports.
This conclusion leads automatically to consider the only deadline to apply for the option for the deferral of import VAT: during the month of November of the year preceding that should take effect.
But it will not be easy for a taxpayer to request this deferral regime during the month of November. This is so because only if it is a large entity or already has been officially approved his application in the monthly refund scheme could opt for the deferral.
Thus, as explained above, an entity that starts its activity in the third quarter and, therefore, its first VAT return is filed in the month of October, in practice, not may request the monthly refund scheme until November (in which case will take effect from January next year) or until January which is their next quarterly settlement period, which will leave you out of the November deadline to request the deferral of VAT on imports.
On the other hand, an entity that has already started its activity in a previous quarter and has requested the monthly refund scheme during the settlement period of the third quarter (from 1 to 20 of October) in practice is not able to request the option by the deferral of VAT on imports until not be officially approved by the tax administration the registration in the monthly refund scheme, for which the Administration has a three months deadline. This is so, even when the rule regarding the monthly refund scheme establishes that the same shall take effect, for those who request it in the deadline enabled during the settlement period of VAT, from the day following the end of the period of liquidation, which would lead us to October 21, without prejudice to that at a later time the Tax Administration can reject the request.
In summary, due to the implementation mechanisms established by the Tax Administration in this regard, only a taxpayer who is officially in a period of monthly payment of the VAT (large company, monthly refunds scheme or VAT grouping scheme) may request during the month of November the option by the deferral of VAT on imports, which makes this month a key date for those taxpayers who are considering requesting this deferment option.
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