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Practical Handbook VAT 2021

Operations treated as deliveries of goods

The following transactions shall be treated in the same way as supplies of goods for consideration, even if there is no consideration:

  1. Self-consumption of goods.

    Self-consumption of goods occurs in the following cases:

    1. When goods are transferred from business or professional property to personal property or are intended for the private consumption of the taxable person.

    2. When there is a transfer of the power of disposal without consideration over tangible assets that are part of the business or professional assets.

      Example:

      This occurs, among other things, when an entrepreneur gives his customers certain products manufactured by him as gifts.

    3. When goods used in one sector of activity are used in another distinct sector of activity of the same taxable person.

      There shall be distinct sectors of the business or profession in the following cases:

      1. When the following requirements are met simultaneously:

        • That the activities carried out have different groups assigned to them in the National Classification of Economic Activities (approved by Royal Decree 475/2007, of 13 April).The groups in this classification are identified by the first three digits.

        • The deduction percentages differ by more than 50 percentage points for the two activities, provided that neither activity is ancillary to the other.

          An ancillary activity is understood to be that whose volume of operations in the preceding year does not exceed 15 per cent of that of the main activity, provided that it contributes to the realisation of the main activity.Ancillary activities follow the regime of the main activity and are included in the same sector as the main activity.

          Under this heading there can be two distinct sectors:

          • The main activity (the one with the highest volume of transactions in the preceding year) together with its ancillary activities and distinct activities with deduction percentages that do not differ by more than 50 percentage points from that of the main activity.

          • Activities other than the main activity for which the deduction rates differ by more than 50 percentage points from the main activity.

      2. Activities under the special simplified, agriculture, livestock and fishing, investment gold transactions or equivalence surcharge schemes.

      3. Financial leasing operations.

      4. Credit and loan assignment transactions, with the exception of those carried out within the framework of a factoring contract.In any case, each of them constitute distinct sectors.

        There is no self-consumption:

        • When a change in the regulations in force obliges an economic activity to form part of a different differentiated sector.This is the case, for example, when the National Classification of Economic Activities is changed.

        • When the taxation system applicable to an economic activity changes from the general system to the special simplified system, the agriculture, livestock and fisheries system, the equivalence surcharge system or the system for transactions in investment gold, or vice versa, including through the exercise of an option right.This is the case, for example, when an entrepreneur who has renounced the application of the simplified regime or the special regime for agriculture, livestock and fisheries of VAT and who had been paying tax under the general tax regime, revokes this renunciation and becomes taxable under the corresponding special regime.

          The provisions of the two preceding indents shall be without prejudice, where appropriate:

          1. Adjustments of deductions provided for in Articles 101, 105, 106, 107, 109, 110, 112 and 113 of the VAT Law.

            Example:

            A farmer is taxed in year "n-1" under the general tax system after having renounced, at the time, the special system for agriculture, livestock farming and fisheries.In that year he deducts 10,000 euros of input VAT for the purchase of a tractor.If, with effect from year "n", you revoke the renunciation and become taxable under the aforementioned special regime, you will have to make the adjustment of the deduction made in that year and the following years until the end of the adjustment period (and provided that you continue to be taxable under the special regime).

            Regularisation:(10,000 euros - 0 euros) ÷ 5 = 2,000 euros (amount to be paid)

          2. The application of the provisions of section two of Article 99 of the VAT Law in relation to the rectification of deductions initially made according to the foreseeable destination of the goods and services acquired, when the actual destination of the goods and services acquired is different from the foreseeable destination, in the case of tax paid or paid for the acquisition or importation of goods or services other than investment goods which had not been used to any extent in the development of the business or professional activity prior to the time when the economic activity for which they were foreseeably intended at the time the tax was paid becomes part of a different sector from the one in which it was previously integrated.

            Example:

            A farmer who is taxed in year "n-1" under the general tax regime because he has renounced the special regime for agriculture, livestock and fisheries deducts EUR 100 of input VAT on the purchase of fertilisers to be used in year "n". If in said year "n" changes to taxation under the special regime, revoking the renunciation, the deduction made must be rectified, paying the 100 euros.

          3. The provisions of Articles 134 bis and 155 of the VAT Act in relation to the cases of commencement or cessation of the application of the special regimes for agriculture, livestock and fisheries or the equivalence surcharge.

            Example:

            A businessman who becomes taxable in year "n" under the special system of the equivalence surcharge, having been taxed in year "n-1" under the general tax system, must pay the result of applying the VAT and equivalence surcharge rates to the acquisition value of the inventoried stocks, excluding VAT.Similarly, but in the opposite direction, a businessman who becomes taxable in year "n+1" under the general scheme having been taxable in year "n" under the special scheme for agriculture, livestock and fisheries, will be entitled to deduct the VAT corresponding to the value of the inventoried stocks.

    4. When inventories of the enterprise are used as investment goods of the enterprise.

      Self-supply does not occur if the taxable person has been given the right to deduct input VAT in full if he has acquired goods of the same kind from third parties.

      This right shall not be deemed to be attributed if during the deduction adjustment period the goods are used for purposes which limit or exclude the right to deduct, are used in transactions which do not give rise to the right to deduct, or if the general pro-rata rule is applicable or a tax-exempt supply is made which does not give rise to the right to deduct.

      Example:

      A real estate developer with a deductible input VAT rate of less than 100 per cent builds a property for sale (stock) which is assigned as an office (investment good) to the company.

  2. Transfers of goods made by an entrepreneur to another EU Member State for the purpose of using them for the needs of his business in that Member State.

    There is no transaction treated as a supply of goods when the goods are used in certain transactions:Thus, the supply of goods deemed to be carried out in the Member State of arrival or the temporary use of such goods in the Member State of arrival, the supply of services for the taxable person established in Spain or the supply of gas, electricity, heat or refrigeration through the natural gas or electricity distribution system or heat or refrigeration networks.

    Transfers made under an agreement for the sale of goods on consignment under the terms of Article 9a of the VAT Act shall not be considered as such.The regime applicable to these transfers is discussed in detail in a separate section of this chapter.