4. The tax over the value added

In 2019, VAT revenue was 71,538 million, which represented a growth of 1.9%.

The evolution of tax collection was framed, as in other cases, within a general trend of deceleration throughout the year. The behavior of the gross VAT, which is a better approximation to what happens within the year than the total tax, illustrates this trend: In the first half of the year, gross revenues (excluding revenues from other periods) increased at rates above 4%, and yet the final growth for the year was 3.6%. In addition, the number of refunds increased significantly, by more than 8%, which limited the progress of tax collection.

final expenditure subject to VAT grew by 3.4%, more than a point and a half below the increase recorded in 2018 (Table 4.1). The downward trend was a consequence of both the general slowdown in the economy and the moderate increase in prices in 2019 (Chart 4.1).

All expenditure components showed the same trend, although it was more pronounced in the sale of new homes. Household spending increased by 3.3%, almost one and a half points below the growth recorded a year earlier. Although the slowdown in consumption growth was less than that observed in housing expenditure, the fact that this component represents more than 80% of total expenditure means that its impact on the slowdown is much greater, as can be seen in Chart 4.2. Spending on new housing fell by more than seven points, from 12% in 2018 to 4.9%. After having recorded an average growth of close to 12% over the last three years, in 2019 there was a notable slowdown that worsened in the second half of the year, in line with the decline suffered by new housing transfers (Chart 4.3). The slowdown in spending by public administrations. It was similar to that of households (3.6% compared to 4.9% in 2018), and as happened the previous year, the cause was the behavior of investment spending, which in 2019 fell to 1.9% from 11.9% in 2018.

The effective rate of VAT remained practically unchanged for another year, at around 15.3%, without having suffered significant changes since the last increases in the general and reduced rates in September 2012 (Table 4.1 and Graph 4.5). The only regulatory change came from the reduction of the rate in cinemas, from the general to the reduced rate, which came into force in mid-2018 (after the approval of the Budget) and, therefore, with an impact only during the first half of 2019 and of very low amount (-37 million, Table 1.5).

The VAT accrued in the period grew by 3.4%, as did the subject expenditure, given the stability of the effective rate (Table 4.1). The net VAT accrued (which differs from the previous one because it includes the variation in the balance that companies leave to compensate from one year to the next) grew a little less, 3.3%.

For its part, the gross VAT accrued grew by 3.5% (Table 4.2), with a deceleration compared to the previous year of two and a half points, equal to that recorded by the VAT accrued in the period, with the VAT ratio remaining relatively constant. gross / VAT accrued, a situation in which it has remained since 2015, when the last relevant change occurred in the management of the tax (the settlement of Customs VAT through self-assessments).

Analyzing the evolution of gross VAT by its components, it is observed that both monthly declarations (Large Companies, groups, other operators covered by the monthly refund regime and import VAT), and quarterly declarations grew at similar rates in 2019: 3.5% the first and 3.7% the second. But the slowdown in the growth of gross VAT was more intense in the monthly declarations (one point more), becoming accentuated in both cases in the second half of the year (Graph 4.4).

Refund requests grew by 4.2% in 2019, almost three points less than the previous year. The entire increase was due to monthly refund requests (more related to exports), which increased considerably in the first quarter of the year, closing with a rate of 6.1%, a value similar to that of the previous year. However, annual applications (linked to the reduced rates at which smaller companies sell) fell by 2.3%, which represents a reduction of almost ten points compared to the increase in applications a year earlier (Table 4.2).

Once the distortion caused by the entry into force of the SII was overcome, the evolution of gross income was similar to that of the tax accrued (it grew by 3.6%), but the notable growth in refunds made meant that the total income for VAT grew at a lower rate (1.9%).

The year 2019 was characterized by the increase in monthly VAT refunds: 10.3%, motivated both by returns corresponding to the previous year (which grew by 14%) and those of the year itself (8.3%). In both cases, the increase was due to the higher number of applications combined with a higher rate of completion than that achieved a year earlier. Annual returns made in 2019, however, grew at a slower pace (3.5% compared to 9.5% in 2018). It should be noted that most of these refunds correspond to applications for the 2018 financial year, which were submitted at the end of January 2019. Although the amount requested was higher than the previous year, the pace of implementation was slower. Finally, refunds due to regional adjustments also increased (4.8%), although less intensely than in the three previous years (with an average increase of close to 9%).

In terms of cash, gross income grew by 3.6% in 2019, and, as with accrued tax, the increase was slightly higher in quarterly returns than in monthly returns (4% and 3.3% respectively, Table 4.2), showing in both cases a deceleration pattern throughout the year.