We highlight some of the latest tax measures introduced by the government, with effect from 23 April 2020:
1. Reduced 0% VAT rate for specific medical equipment.
Zero-rate VAT will be applied to supplies of goods, imports, and intra-EU acquisitions of goods when the recipients are hospitals, clinics, public bodies, or private centres that are not-for-profit and social in nature. The measure only applies until 31 July 2020, and will affect the medical equipment listed in the annex to the Royal Decree, which includes: respirators, ventilators, masks, gloves, hats, thermometers, hand soap, and hospital beds, among others.
The formal requirements include the need for the invoice to indicate that the transaction is zero-rated, although this will not affect or limit the right of the taxpayer carrying out the transaction to deduct input VAT.
2. Calculation of Corporate Income Tax instalment payments using LIS article 40.3.
a) Entities with sales in 2019 not exceeding 600.000 euros, and which fall under article 40.2 of the Corporate Income Tax Act (LIS) for the calculation of instalment payments, for reporting periods beginning 1 January 2020 onwards, and exclusively for instalment payments corresponding to this reporting period, may make the calculation based on the portion of the tax base corresponding to the first 3, 9, and 11 months. In other words, they may choose to calculate their instalments payments using the method set out in LIS article 40.3. The method can be changed in this way for (i) instalment payments postponed until 20 May, and (ii) instalment payments due in October and December 2020.
b) Entities with sales in 2019 not exceeding 6.000.000 euros may also use the method in LIS article 40.3, but only for instalment payments due in October and December 2020.
The ability to change the method of calculation for instalment payments does not extend to entities under the tax consolidation regime.
3.Tax deadlines extended until 30 May 2020. (previously 30 April and 20 May)
a) Suspension of tax deadlines
- Prescriptive and limitation periods for tax proceedings are suspended until 30 May.
- The one-month window for filing a request for reconsideration or an appeal will reopen on 1 June.
- Similarly, the computation of time limits has been suspended until 30 May for responding to tax enquiries, making declarations in verification or sanctioning proceedings, and tax information requests, among others.
b) Tax liability payment deadline extended
- The deadline for paying Tax Agency settlements (e.g. payment letters) is extended until 30 May.
In all the above cases, the deadline is extended by default, with no need to make a formal request on the part of the taxpayer. However, should the taxpayer respond to an enquiry or tax information request, or make a declaration, the relevant step will be considered completed.
This extension only applies to cases in which the deadline established by standard regulations is before 30 May. Otherwise, the standard deadline applies.
Ana Bueno, Tax Advisor, Madrid