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Practical Handbook VAT 2021

Deliveries of goods and provision of services

The Law establishes two fundamental rules:

  • The tax is due when the transaction takes place.

  • Where there are advance payments prior to the completion of the transaction, the tax becomes chargeable on receipt of all or part of the price for the amounts actually received (except in the case of supplies exempted because they are destined for another Member State).

Example:

The exchange of plots of land for flats in the buildings constructed on them gives rise to the accrual of VAT corresponding to the future delivery of the flats due to the advance payment involved in the delivery of the plot of land.

Amounts retained by the recipient of the work as a guarantee of the proper execution of the work are not considered to have been effectively collected.

In order to determine when the taxable event is deemed to have occurred, the Law distinguishes between different transactions:

  1. Deliveries of goods: when they are placed at the disposal of the acquirer or, as the case may be, when they are made available in accordance with the law applicable to them.

    It is immaterial whether or not the recovery takes place at a later date.In instalment sales, therefore, tax is due in full when the goods delivered are placed at the disposal of the purchaser, even if the instalments are paid at a later date.

    When a public deed has been executed, the provision is deemed to have been made, by legal provision, at the time of its execution.However, if a different time for making the thing available is deduced from the deed, the chargeable event occurs when the thing is made available.

    In the case of supplies of goods without transfer of ownership (contracts of sale with reservation of title or other suspensive condition, sale and leaseback of goods or leasing of goods with a mutually binding transfer of ownership clause), the chargeable event occurs when the goods come into the possession of the purchaser.

  2. Service provision:when the taxable transactions are rendered, executed or carried out, except in the case of continuing operations as described in the second paragraph of Article 75.1.2 of the LIVA.

    Example:

    The VAT for services rendered by lawyers and solicitors in the course of legal proceedings is due when the service is completed, i.e. when the proceedings are concluded (except for advance payments).

  3. In the case of , the chargeable event occurs when the goods to which they refer are placed at the disposal of the owner of the work, .

  4. In executions of works with or without the contribution of materials, whose addressees are public administrations, at the time of their reception.

    Example:

    Entrepreneur who carries out two work executions with provision of material, one for another entrepreneur and the other for a public administration.

    • Where the recipient is another entrepreneur, the chargeable event occurs when the work is made available to its owner.

    • When the recipient is a public administration, the chargeable event occurs when the work is received and not when the work is made available to its owner.This is without prejudice to the fact that, if there have been advance payments, the VAT will accrue at the time of their collection and on the amount thereof.

  5. Transfers of goods between principal and commission agent made under sales or purchase commission contracts where the commission agent acts in his own name:

    • On the sales commissions: the VAT corresponding to the supply from the principal to the commission agent becomes due when the commission agent delivers the goods to the customer.

    • At purchase commissions: VAT on the supply from the commission agent to the principal becomes chargeable when the goods are delivered to the commission agent by the supplier.

  6. In the case of supplies of goods made under contracts whereby one of the parties delivers to the other party movable goods, the value of which is estimated at a certain amount, the recipient being obliged to procure their sale within a certain period and to return the estimated value of the goods sold and the remainder of those not sold, the accrual of the supplies of the goods sold will occur when the recipient places them at the disposal of the acquirer.

  7. In the case of self-consumption, when the taxable transactions are carried out.

  8. In leases, supplies and, in general, in the operations of successive or continuous tract, at the time when the part of the price comprising each receipt becomes due.

    Examples:

    Gas supply, electricity supply, leases.

    In the case of leases, non-payment of rent does not prevent the obligation to pay the tax from continuing, because the tax will continue to accrue each time the rent is due.

    However, when no price has been agreed upon or the moment of its enforceabilityhas not been determined, or the enforceability is longer than one calendar year, the accrual will occur on 31 December of each year for the proportional part corresponding to the period elapsed from the beginning of the transaction, or from the previous accrual, until the aforementioned date.

    Example:

    In the case of a lease of premises where it is stipulated that the rent is payable at the end of the lease and the lease has a duration of 4 years, the rent is due on 31 December of each year, not of the 4 years.

    When the supplies constitute exempt intra-Community supplies of goods (Article 25.One of the LIVA) or exempt transfers of tangible goods from a company to another Member State, to use them for the needs of the company in this State (Article 25.Three of the LIVA), if the price has not been agreed, or the time of chargeability has not been determined or this has been established with a periodicity exceeding one calendar month, the accrual of the tax will occur on the last day of each month for the proportional part corresponding to the period elapsed since the beginning of the operation, or since the previous accrual, until the aforementioned date.

  9. In the case of intra-Community supplies of exempt goods, other than those under (g) above, the chargeable event shall occur on the 15th day of the month following that month:

    • On the date on which dispatch or transport of the goods to the purchaser begins, or on the date of issue of the invoice if this is earlier.

    • At the time the goods are placed at the disposal of the acquirer in supplies of goods under an agreement for the sale of goods on consignment or at the date of issue of the invoice for such transactions, whichever is the earlier.

    • At the time of non-compliance with the conditions referred to in paragraph three of Article 9a of this Law.

    • On the day following the expiry of the 12-month period after the arrival of the goods in the Member State of destination without any entrepreneur having acquired them under a consignment sale agreement.(Amendment introduced by Article 214 of Royal Decree-Law 3/2020 of 4 February (BOE of 5 February), applicable from 1 March 2020).

  10. In the case of the supplies of goods carried out under the terms of Article 8 bis of the LIVA, the accrual of tax on the supply made to the trader or professional who facilitates the sale or supply, as well as the supply made by him, will occur with the acceptance of payment by the customer.

  11. In the operations of leasing, the accrual occurs at:

    • Before there is a commitment to exercise the purchase option, the transaction is treated as a leasing service and tax accrues as each receipt becomes due.

    • When there is a commitment to exercise the option, the transaction is treated as a supply of goods and tax is due on the amount outstanding.