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The group of entities may opt for the application of the normal special scheme or for the application of the special scheme at an advanced level.This option set out in Article 163e.Five of the Law on VAT, is developed in Article 163 octies.One and Three of the aforementioned Law.

The option for the advanced level shall refer to all the entities that apply the special regime and form part of the same group of entities, and the agreement must be adopted in accordance with the provisions of the section "Conditions for the application of the special regime". This option shall be valid for a minimum of one calendar year, and shall be understood to be extended unless waived.

Option for advanced level

When this option, provided for in Article 163e, is exercised.Five of the VAT Law, the taxable amount of supplies of goods and services carried out in the territory where the tax applies between entities of the same group applying the special scheme shall be the cost of the goods and services used directly or indirectly, in whole or in part, in their execution and for which the tax has actually been borne or paid.

When the goods are considered investment goods, the taxation must be completed in full within the regularisation period for charges corresponding with said goods.

Each of the entities of the group shall act, in its transactions with entities that do not form part of the same group, in accordance with the general rules of taxation, without the group of entities regime having any effect in such cases.

When the option for this advanced level is exercised, the transactions between entities of the same group applying the special scheme will constitute a separate sector of activity, to which the goods and services used directly or indirectly, in whole or in part, in the performance of the aforementioned transactions and on which the tax has been effectively borne or paid will be deemed to be assigned.

Entrepreneurs or professionals may deduct in full the amounts paid or paid for the acquisition of goods and services intended directly or indirectly, in whole or in part, for the performance of these transactions, provided that such goods and services are used in the performance of transactions giving rise to the right to deduct in accordance with the provisions of Article 94 of the VAT Act.This deduction shall be made on the basis of the foreseeable use to which the goods and services are to be put, subject to correction if the use is altered.

Entities exercising the option for the advanced level will apply the special pro rata rule in relation to the differentiated sector of intra-group transactions, without prejudice to the options that may be exercised in relation to the other differentiated sectors that each of the group entities may have (Royal Decree 1073/2014, of 19 December, amended article 61 bis.3 of RIVA with effect from 1 January 2015).

The amount of the deductible contributions for each of the entrepreneurs or professionals integrated in the group of entities shall be the amount resulting from the general tax rules.These deductions shall be made individually by each of the entrepreneurs or professionals applying the special regime for the group of entities.

Once the amount of deductible tax for each of these entrepreneurs or professionals has been determined, the right to deduct shall be exercised by them individually.

In the event that any of the transactions carried out by any of the entities included in the group of entities are subject to any of the other special regimes regulated in the Law of VAT, these transactions shall follow the deduction regime corresponding to them according to these regimes.