FAQs
From the 1st of January 2014
The taxpayers whose volume of operations during the previous calendar year did not esceed €2,000,000
The taxpayers whose collections in cash from a same recipient during the previous calendar year exceed the amount of €100,000 are excluded.
The volume of operations will be understood as the total amount, excluding the VAT and, if applicable, the equivalence surcharge and the fixed compensation, of the deliveries of goods and provisions of services carried out by the taxpayer during the previous calendar year, including the exempt ones.
The following will not be taken into consideration:
- Occasional deliveries of real properties
- Deliveries of capital goods
- Non-standard financial operations and exempt operations relating to investment gold
The operations will be understood to have taken place when the accrual of the value added tax is or has been produced, if to the operations were not carried out under the special scheme of cash basis.
-
Example:
The amount of the volume of operations will have to be increased after a year.
You may apply the regime during the current calendar year in which the activity begins.
In the following year, the company will continue to pay taxes on a cash basis if, in the year in which the activity begins, the volume of operations, raised in this case to the year, does not exceed €2,000,000, the cash collections from the same recipient do not exceed the amount of €100,000 and the company does not renounce the regime.
Yes. The option must be exercised at the time of filing the start of activity declaration, or as part of the tax registry declaration in December, in the year preceding the calendar year in which it will come into force.
The option will be understood to be extendable until it is renounced.
To all the operations carried out in the territory of application of the tax.
The following are excluded:
- Those pursuant to special simplified regimes for agriculture, stockbreeding and fishing, equalisation tax, gold as an investment, applicable to services rendered electronically and from the group of companies.
- Exports and intra-Community deliveries of goods.
- The intra-Community acquisitions of goods (within the EC).
- Taxpayer reversal scenarios.
- Imports and operations assimilated to imports.
- Self-consumption of goods and services.
Yes.
This regime defers the accrual, and, wish this, the declaration and payment of VAT paid up to the time that the taxpayer charges the customers. However, in the same regard, the deduction of input VAT on acquisitions will also be deferred until the payment is made to suppliers (double payment criterion); all this will be limited to December 31 of the year immediately following that in which the operations are undertaken.
In the general scheme, the accrual of the VAT takes place at the moment of the delivery of the good or service, without taking into account when the payment, except if there is an advanced payment. The deferred payment will not have impact in the payment of the VAT nor in the deduction right
In the special scheme of the cash basis, the accrual takes place at the moment of the collection and, at the same time, the deduction right will arise with the payment, in both cases with the deadline of 31 December year following to the one in which the operation is carried out.
• At the time of the total or partial payment of the price, for the amounts actually received.
• On 31 December of the year immediately following that in which the operation was carried out, if the payment has not been made.
* Example:
Employer under the special scheme on cash basis delivers goods in the first quarter of 2014 for the amount of €600,000.
Half of the price is collected on the 1st of May 2014 and the rest on the 1st of May 2016. When does the accrual take place?
The accrual will occur on May 1, 2014 for the amount collected (300,000 x 21% = €63,000) and on December 31, 2015 for the remaining amount
(300,000 x 21% = €63,000).
No, this collection does not generate accrual, as it already took place on 31 December.
The payment will be understood as produced in the due date and considered as perceived on the date the payment appears in the creditor's account.
(consultation of Taxation General Directorate V0187-05).
The payment will be understood as made when the amount is paid by the debtor. The discount of a bill of debt or bill of exchange lacks relevance when determining the accrual, as it does not have liberating effects for the debtor.
The shift should take place at the time of issuing and handing over the bill, but will be understood to have taken place when payment is made.
• Example:
On the 1st of March 2014 an employer delivers goods whose collection will take place in 6 months. At the moment of the delivery, the employer issues the corresponding invoice. Must the VAT have effects on it?
Yes, although the VAT will be accrued at the moment of the collection (the 1st of September 2014) and, therefore, it will be declared in the third quarter of 2014.
The right to the deduction arises:
• At the time of the total or partial payment of the price, for the amounts actually paid
• On 31 December of the year immediately following the one in which the operation was performed, if the payment has not been made
• Example:
Employer under the special scheme of cash basis purchases goods in the first quarter of 2014 for the amount of €600,000.
Half of the price is paid on the 1st of July of 2014 and the rest on the 1st of February 2016. When will the employer be able to deduce the input VAT in the purchase?
The accrual and, therefore, the right to the deduction of the tax will happen on 1 of July 2014 for the paid amount (300,000 x 21% = €63,000) and on 31 of December 2015 for the remaining amount (300,000 x 21% = €63,000).
In the tax return-settlement of the period in which the deduction right of the input taxes or in those of the successive ones has arisen, only if four years have not passed, starting on the entitlement of the right.
• Example:
A businessperson attached to the special cash-accounting regime acquires goods in the first quarter of 2014 for a value of €600,000, the payment for which is made on 1 May 2014. In which settlement declaration can it deduct the input VAT on the purchase?
The businessperson can deduct the input amounts on the declaration of the second quarter of 2014, or in the declarations of the following quarters, provided that no more than four years have elapsed since 1 May 2014.
The operations will be imputed to the year to which the accrual would correspond if they had not been under the special scheme.
Taxpayers attached to this regime:
- Must include the operation invoice dates in the record book of invoices issued, separately indicating the corresponding amount and the bank account or payment method to be used.
- Must include the operation payment dates in the record book of invoices received, separately indicating the corresponding amount and the payment method.
- Must mention the 'special cash-accounting regime' on invoices issued.
In the general timeframes, as if said transactions were not subject to the special regime, without prejudice to completing the information regarding the total or partial charges or payments in the corresponding book, at the time of their execution.
• Example:
A businessperson attached to the special cash-accounting regime delivers goods for an amount of €600,000 on 1 March 2014.
Half of the price is paid on 1 May 2014 and the other half on 1 May 2015. When are these transactions recorded?
The invoice issued for the sale is recorded in the record book of invoices issued corresponding with the first quarter of 2014.
This should be recorded afterwards, specifying the payments made on 1 May 2014 and 1 May 2015, in the record books of invoices issued for the second semester of 2014 and 2015, respectively.
On 31 December of the year after the transaction, as this is the accrual date. The subsequent payments received will not generate any account entry.
The 31st of December of the year following the one in which the operation was carried out as it is the accrual date. The subsequent payments made will not generate any account entry.
Yes, taking into account the accrual general criterion, without prejudice of them having to be complemented with the data related to the collections.
By presenting the corresponding tax register statement in the month of December previous to the beginning of the calendar year in which it must be in force.
The renunciation will have a minimum validity of 3 years.
Yes.
Operations carried out during its validity will continue to be taxed according to cash basis as long as they comply with the requirements established to be registered in the scheme.
Example:
2013
Total amount of sales without VAT: 1,000,000 €
2014
The taxpayer opts for the special system of cash basis.
Total amount of sales without VAT: €3,000,000.
All sales are made in cash, except the delivery of machinery for the amount of €500,000 half of which was paid at the moment of delivery on 1 June 2014 and the remaining quantity on 1 June 2015.
VAT accrued in the second quarter by machinery sale:
250,000 x 21% =€52,500 (the accrual is produced with the collection)
2015
The 2014 sales volume exceeds €2,000,000 and therefore remains excluded from the cash basis special scheme.
Total amount of sales without VAT: 1,000,000 €.
All sales are carried out in cash except the delivery of a property for the amount of €600,000, half of which is paid at the moment of delivery on 1 June 2015 and the remaining quantity on 1 June 2016.
VAT accrued in the second quarter 2015:
- for the sale of the property: €600,000 x 21% = €126,000 (the accrual is produced with the delivery of the good regardless of collection).
- for the machinery sale: 250,000 x 21% = €52,500 (the accrual is produced with collection).
In the year 2016, the taxpayer may again opt for the cash basis scheme given that the sales volume does not exceed €2,000,000, as long as the rest of the requirements are fulfilled.
Example:
2013
Total amount of sales without VAT: 1,000,000 €.
2014
The taxpayer opts for the special system of cash basis.
On March 1, he receives cash from one of his clients for various sales, each of which does not exceed €2,500, a total amount of €200,000.
All sales are made in cash, except the delivery of machinery for the amount of €500,000 half of which was paid at the moment of delivery on 1 June 2014 and the remaining quantity on 1 June 2015.
The exclusion will take effect as of 1 January 2015.
The operation when the machinery is delivered will pay tax with the cash basis scheme, even if the collection ends when the taxpayer is already excluded from the scheme:
- VAT accrued in the second quarter 2014: 250,000 x 21% = 52,500 €.
- VAT accrued in the second quarter 2015: 250,000 x 21% = 52,500 €.
The right to the deduction arises:
-
At the time of the total or partial payment of the price for the amounts effectively paid.
-
On 31 December of the year immediately following that in which the operation took place if the payment has not been made.
Example:
Employer A resorted to the special scheme of cash basis delivers goods to company B in the first quarter of 2014 for the value of €600,000. Half of the price is collected on the 1st of May 2014 and the rest on the 1st of May 2016. When will company B be able to deduce the tax?
The right to the deduction arises on 1 May 2014, for the amount paid (300,000 x 21% = €63,000) and on 31 December 2015 for the remaining amount (300,000 x 21% = €63,000).
Therefore, company B will be able to deduct input taxes for the value of €63,000 in the tax return of the second quarter of 2014 and the €63,000 remaining in the tax return of the fourth quarter of 2015.
No.
Must include the operation payment dates in the record book of invoices received, separately indicating the corresponding amount and the payment method.
The account entry of the operations in RECC will be carried out in the general deadlines as if these operations had not been applied by the special scheme, without prejudice of completing the data concerning to the total or partial payments in the book corresponding to the moment in which they are carried out.
The modification of the gross tax base of article 80.Four of the Value Added Tax Act will determine whether there is a right to the deduction of the charges borne by the debtor attached to the special cash-accounting regime, even if pending deduction on the date on which the changes to the gross tax base were made.
Example:
On 1 January 2014 company A, in the general VAT scheme and with a 2013 sales volume of less than €6,010,121.04, delivers goods to company B, which is registered in the special scheme for cash basis, in the amount of €100,000 whose payment is postponed until 1 May 2014.
Once the maturity date has elapsed, company B has not paid the debt, and therefore company A decides to change the gross tax base in accordance with the procedure established in article 80.Four of the Value Added Tax Act, issuing the corresponding amended invoice on 1 August 2014. On 10 August 2014, company B receives this rectification invoice What effects will it have on the third quarter tax return?
1 January 2014:
- Company A (general scheme) will have been charged VAT for the amount of €100,000 x 21% = €21,000, paying the tax in the tax return corresponding to the first quarter of 2014.
- Company B (cash basis scheme) will not have deducted the quota of input VAT. The right to deduction will be established on 1 May 2014 or on 31 December 2015 if the payment has not taken place.
1 July 2014
- Once six months have passed since the payment due date without receiving payment, company A classifies the credit as irrecoverable and modifies the taxable base, issuing a rectification invoice on 1 August 2014.
- Company B receives the rectification invoice on 10 August 2014:
This results in the right to deduct the input VAT on the purchase, whereby the third quarter's tax return will include an input VAT charge of €21,000.
The amount of the amended charges will be declared as a €21,000 reduction of the deductible charges.
The final effect will be neutral since company B is not subject to pro rata.
3T
VAT deductible_______________________________________________€21,000
VAT supported corrective invoices___________________ -€21,000
Yes, taking into account that the credit will be qualified as irrecoverable on 31 December of the year immediately following the year in which the operation was carried out.
The declaration of bankruptcy will be determined on the date of the writ, the accrual of the accrued amounts and the deduction of the input taxes that were still pending of accrual or deduction in the tax return-assessment corresponding to the taxable events previous to the bankruptcy declaration.
• Example:
Company A was declared bankrupt and was under the special scheme on cash basis, submits the following data on the date of the writ (1 March 2014):
-Output VAT pending payment______________________€300,000
-Input VAT pending payment for purchases carried out to companies under the scheme on cash basis_____________________________€50,000
-Input VAT pending payment for purchases carried out to companies under the general scheme______________________________________€25,000
In the tax return of the first quarter of 2014, pre-bankruptcy period, it will have to state:
VAT entitled to________________________________________€300,000
VAT deductible__________________________________________€75,000
Yes.
The date of the bankruptcy declaration will determine:
- for the taxpayer under the special scheme of cash basis, the accrual of the output taxes that were still pending of accrual.
- for the recipient of the operation, taxpayer in the general scheme, the entitlement of the right to the deduction of the input taxes.
• Example:
On January 1, 2014, company A, under the special cash-based regime, delivers goods to company B, under the general VAT regime, for an amount of €100,000, the collection of which is deferred to May 1, 2014.
On February 1, 2014, a ruling was issued declaring company B bankrupt. What effects will this have on both companies?
Company A will have to include an output VAT of €21,000 in its tax return of the first quarter of 2014 even if the credit is pending payment.
Company B will have to deduce the quota of input VAT of €21,000 in the prebankruptcy declaration of the first quarter of 2014.
Yes.
No, since the transfer of fixed assets is included in the simplified scheme.
Yes, as long as there is no taxpayer reversal, an operation that is also excluded from the RECC.
Yes, and this will determine a deferral of the output VAT and of the equivalence surcharge up to the moment in which the collection of the operation (with deadline 31 December of the year after to the one in which the operations were carried out).
Yes.
The payment media used by the employer will be the International Bank Account Number (IBAN) of the account receiving the payment.
The payment media used by the recipient will be the International Bank Account Number (IBAN) of the account (from which he/she carries out the transfer).
Yes, on 31 December you can make the corresponding change to the gross tax base, issuing an amending invoice that can be assigned to the last settlement declaration of 2015.
The operations are the following:
Invoices issued during the month of JANUARY |
||||||
Invoice number |
Customer identification |
Invoice date |
Taxable base |
Type |
Tax payable |
Total invoice |
1 |
CUSTOMER |
20/01/2014 |
1,000.00 |
10.00 |
100.00 |
1,100.00 |
2 |
CUSTOMER |
25/01/2014 |
1,500.00 |
0.00 |
0.00 |
1,500.00 (operation with taxpayer reversal) |
3 |
CUSTOMER |
30/01/2014 |
500.00 |
10.00 |
50.00 |
550.00 |
Total chargeable |
3,150.00 |
In the month of JANUARY the three issued invoices will be registered in the Register of Issued Invoices.
In the month of FEBRUARY the identification of the paid invoices, the identification of the customer, the amount of the accrued quota, the date of the payment, the total or partial paid amount, and the identification of the bank account in which the transfer has been received will be registered.
The account entry of the invoices paid (as long as the customer does not specify which of them is being paid), will be carried out following the order of the invoices according to their date, registering the collection starting from the oldest, and up to the most recent.
Account Entries in the Register book of Issued Invoices February |
|||||
Invoice number |
Customer identification |
Tax payable |
Date of reception of payment |
Paid amount |
Means for the reception of payment |
1 |
CUSTOMER |
100.00 |
10/02/2014 |
1,100.00 |
IBAN |
3 |
CUSTOMER |
36.37 (2) |
10/02/2014 |
400.00 (1) |
IBAN |
NOTE:
Estimate of the paid amount corresponding to invoice number 3:
(1) Amount paid = 3,000 - 1,100 - 1,500
(2) Accrued quota = [Amount received / 1.10] * 0 .10
The operations are as follows:
Invoices received during the month of JANUARY |
||||||
Invoice number |
Supplier identification |
Invoice date |
Taxable base |
Type |
Tax payable |
Total invoice |
1 |
SUPPLIER |
20/01/2014 |
1,000.00 |
10% |
100.00 |
1,100.00 |
2 |
SUPPLIER |
25/01/2014 |
2,000.00 |
10% |
200.00 |
3,410.00 |
1,000.00 |
21% |
210.00 |
||||
3 |
SUPPLIER |
30/01/2014 |
500.00 |
10% |
50.00 |
550.00 |
Total due |
5,060.00 |
In the month of JANUARY the three invoices received will be recorded in the Register Book of Received Invoices.
In the month of FEBRUARY the identification of paid invoices, the identification of the supplier, the amount of the quota, as well as the payment date, if partial payment was made or payment in full, and the identification of the bank account from which the transfer was made will be recorded.
Account Entries in the Register Book of Received Invoices February |
|||||
Invoice number |
Customer identification |
Tax payable |
Payment date |
Amount paid |
Means of payment |
1 |
SUPPLIER |
100.00 |
10/02/2014 |
1,100.00 |
IBAN |
2 |
SUPPLIER |
140.76 (3) |
10/02/2014 |
1,548.39 (1) |
IBAN |
2 |
SUPPLIER |
147.80 (4) |
10/02/2014 |
851.61 (2) |
IBAN |
388.56 |
3,500.00 |
The record account entry corresponding to receieved invoice number 2 (total amount of the invoice: 3,410 €), corresponds to the collection of 2,400 euros (3,500 – 1,100). In this invoice two different tax rates apply, and therefore the distribution of payment will be carried out applying the proportion of collection carried out (2,400 / 3,410) to each of the taxable bases of the invoice, taking into account the tax rate of each.
NOTE:
Calculation of amounts paid corresponding to invoice number 2:
(1) Amount paid = (2,400/3,410) * 2,000 * 1.10
(2) Amount paid = (2,400/3,410) * 1,000 * 1.21
Calculation of the quotas accrued corresponding to invoice number 2:
(3) Quota = [Amount paid / 1.10] * 0.10
(4) Quota = [Amount paid / 1.21] * 0.21