5 February 2020 saw the publication, a little later than scheduled, of Royal Decree-law 3/2020, which transposes various EU Directives and Regulations onto Spanish legislation. Included among these are the VAT “Quick Fixes”, which we analysed in a tax update in October 2019.
These changes will come into force on 1 March 2020.
- Call-off stock
As a result of the Quick Fixes, suppliers who carry out intra-community (IC) supplies of call-off stock, and meet a series of requirements, will no longer be required to register and file tax returns in the country of arrival.
Under the new standards, “call-off stock arrangements” are not considered as IC transfers of goods, and as such will no longer be subject to the previously applicable formal VAT obligations in the country of arrival.
However, in the country of departure, this information must be included in the EC Sales List (Form 349 in Spain) and in the register book of specific IC operations. The more practical aspects of the new regulations, such as the key points of the formal obligations, are still to be developed by ministerial order.
- Chain transactions
The Directive harmonises the criteria determining which of the transactions in a chain should be linked to the transport of goods and, therefore, which transaction is the IC supply and acquisition.
- VAT identification number and EC Sales List
As we mentioned in our previous tax update, the legislator will now treat (i) the correct VAT-ID number and (ii) the inclusion of the transaction in the EC Sales List, as substantive requirements.
To this end, the implementation of the Quick Fixes sets the following requirements for a transaction to be considered as a zero rate IC supply: (i) the buyer has previously provided the vendor with a valid VAT number and (ii) the transaction has been included or will be included in the EC Sales List.
Although in practice, at least in the Spanish legal system, the use of these requirements was already customary in the Tax Agency’s interpretations, under the new regulations it will become obligatory.
In addition to these two requirements, the exemption of the IC supply is also dependent upon the VAT number of the acquirer being listed on the VAT Information Exchange System (VIES) before the IC invoice’s date of issue. This may cause some practical difficulties when checking the validity of a VAT number in prior transactions.
- Simplification of proof of transport
Unlike the other measures, the simplification of the proof of transport is effective since 1 January 2020, due to its inclusion in a European Regulation which has direct effect, with no need for transposition.
The Spanish adaptation makes explicit reference to the European Regulation, although it also adds the option to provide proof of transport via “any legally admissible means of proof”.
Tax Advisor, Madrid