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Practical Handbook VAT 2022

1.Exemption to respond to the Covid-19 pandemic

Royal Decree-Law 24/2021, of 2 November, amends Articles 22.Nine and 61 of the Law on VAT, in order to establish VAT exemption for imports of goods, supplies of goods and services to the Commission or a body or agency established under EU law, when they acquire such goods or services in response to the COVID-19 pandemic in the exercise of their functions, provided that the imported goods or goods and services acquired are not used for subsequent supplies for consideration by the entity benefiting from the exemption.

The exemptions introduced should be applied with retroactively from 1 January 2021 and with indefinitely, provided that the purchases are linked to the fight against the pandemic.

Retroactive application will require the rectification of transactions carried out by taxable persons in respect of which VAT had become chargeable from 1 January 2021 until its entry into force, subject to the general criteria contained in the VAT Act.