COVID-19 crisis: VAT tax measures

To address the COVID-19 crisis in Spain, the Government has issued several Royal Decrees related to measures concerning VAT matters.

Royal Law-Decree 7/2020 allows taxable persons with an annual turnover in 2019 of under EUR 6,010,121.04 to benefit from a tax-debt postponement (up to EUR 30,000) for six months. Additionally, during the first three months of this postponement no interest will accrue on amounts owing.

Furthermore, the deadline for filling the VAT return for Q1 has been extended until 20 May 2020 (instead of 20 April 2020) for those companies and entrepreneurs whose annual turnover in 2019 was lower than EUR 600,000 (Royal Law-Decree 14/2020).

On a temporary basis, from 23 April 2020 until 31 July 2020, a zero rate has been established applicable to domestic supplies, imports, and intra-Community acquisitions of medical equipment listed in the annex of Royal Decree-Law 15/2020 whose recipients are public law entities, clinics or hospital centres, or private social entities. The application of the zero rate will not limit the right of taxpayers to deduct the input VAT on their purchases, though they have to document on the invoice that it is treated as an exempt operation.

Additionally, a reduced VAT rate of 4% will be applied to books, newspapers, and magazines in electronic format, so long as they do not contain, solely or principally, advertising.

Finally, the Government also approved general tax measures (Royal Law-Decree 15/2020) that extended to 30 May 2020:

The due date for payment of tax debts related to procedures initiated by the tax authorities.
The due date of the debt postponement and the payment in instalments approved by the tax authorities.
The date for auctions and sales of goods carried out by the tax authorities.
The date within which a taxpayer must meet tax authorities’ requests, and the period to file appeals.
The date within which the tax authorities can bring enforcement proceedings.

Rosario Estella
rosario.estella@bdo.es

Álvaro Gómez-Elvira
alvaro.gomez@bdo.es