Is a taxable person who carries out only VAT exempt supplies obliged to keep the VAT Ledger of incoming invoices? Binding tax ruling of June 20th, 2017


With the entry into force of the SII (Immediate Provision of Information) and the new scope of information obligations to be fulfilled by VAT taxpayers, doubts have arisen as to the obligation of a taxable person who only carries out VAT exempt transactions to keep the Incoming and Outgoing VAT Ledgers.

In particular, through the binding tax ruling number V0373-07 of 26 of February, 2017, the General Tax Directorate answered to this question by clearly stating that:

“To the extent that the consultant does not have an obligation to issue an invoice, it will not be necessary to keep the VAT Ledger of invoices issued.

As for the VAT Ledger of invoices received, since the activity carried out is exempt from tax, there will be no right to deduct the VAT incurred in the acquisition of goods and services for said activity, so it will not be necessary to keep said VAT Ledger.”

Therefore, according to the DGT’s criterion, it was clear that a taxable person who only carried out exempt transactions was not obliged to keep the VAT Ledger of Invoices Received or to comply with the SII.

However, in light of the legislation of the SII and the explanatory memorandum of Royal Decree 596/2016, where it is established that the new electronic system of keeping the Registry Books will reduce the administrative burden associated with the provision of information of the taxpayer’s liabilities and will be a useful tool to prepare tax returns, the DGT has considered necessary to change the criteria regarding the keeping of the VAT Ledger of Received Invoices for these cases, through a new binding tax ruling dated June 20, 2017, establishing that such handling shall be necessary irrespective of whether the taxable person carries out operations totally exempt and without the right to deduct.

In our opinion, this new criterion is in accordance with what is established in Article 62 of the VAT Regulation, which did not establish any exception to the keeping of the VAT Ledgers according to the transactions carried out were exempt or not, but only established this exception for taxable persons benefiting from some special VAT schemes, such as the simplified scheme, agriculture, livestock and fisheries, or the retail sales scheme, under certain circumstances.

In conclusion, a taxable person who carries out only exempt transactions without the right to deduct is also obliged, in general, to keep the VAT Ledger of Received Invoices, as well as to comply with the SII regulations insofar as is affected by it.

A copy, in Spanish, of the Binding Tax Ruling number V1588-17 is attached.

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