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:

  • Year 202X

    Total amount of sales without VAT, accrued according to the general rule (art.75 LIVA) = €1,000,000

    During the year 202X+1, the cash VAT regime can be applied

  • Year 202X+1

    Total amount of sales without VAT accrued according to general rule = €2,500,000

    Total amount of sales without VAT collected = €1,500,000
    Total amount of sales without VAT pending collection = €1,000,000

    The volume of accrued transactions as if the special cash basis regime had not been applied is €2,100,000, which exceeds €2,000,000, so in the year 202X+1 it is excluded from the regime.

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:

1. 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.
2. Exports and intra-Community deliveries of goods.
3. The intra-Community acquisitions of goods (within the EC).
4. Taxpayer reversal scenarios.
5. Imports and operations assimilated to imports.
6. 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:

Businessman under the special cash basis regime delivers goods in the first quarter of 202X for an amount of €600,000.
Half of the price is charged on May 1, 202X and the remainder on May 1, 202X+2. When does the accrual take place?

The accrual will occur on May 1, 202X for the amount collected (300,000 x 21% = €63,000) and on December 31, 202X+1 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 March 1, 202X, a businessman delivers goods whose collection will occur within 6 months. At the moment of the delivery, the employer issues the corresponding invoice. Must the VAT have effects on it?

Yes, although VAT will be accrued at the time of collection (September 1, 202X) and will therefore be declared in the third quarter of 202X.

The correction may be made in the month in which the new tax rates come into force and the following month.

For example, if food was sold in 2024 when the applicable rate was 0% or 5%, if the collection occurs in October, when the rates become 2% or 7.5%, the tax rate applicable to the transaction will be the one in force at the time of collection. The entrepreneur may rectify the invoice until November 30.

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:

Businessman under the special cash basis regime acquires merchandise in the first quarter of 202X for an amount of €600,000.
Half of the price is payable on July 1, 202X and the remainder on February 1, 202X+2. When will the employer be able to deduce the input VAT in the purchase?

The accrual and, therefore, the right to deduct the tax will occur on July 1, 202X for the amount paid (300,000 x 21% = €63,000) and on December 31, 202X+1 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 businessman under the special cash basis regime purchases goods in the first quarter of 202X for an amount of €600,000, the payment of which occurs on May 1, 202X. In which declaration-settlement can he deduct the VAT incurred on the purchase?

The employer may deduct the incurred contributions in the declaration for the second quarter of 202X or in the declarations for the following quarters provided that four years have not passed since May 1, 202X.

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:

Businessman under the special cash basis regime delivers goods worth €600,000 on March 1, 202X.
Half of the price is charged on May 1, 202X and the remainder on May 1, 202X+1. When are these transactions recorded?

The invoice issued for the sale will be recorded in the invoice registration book corresponding to the first quarter of 202X.
This entry must be completed later by recording the payments made on May 1, 202X and 202X+1 in the invoice registration books issued in the second quarter of 202X and 202X+1 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:

Year 202X

Total amount of sales without VAT: 1,000,000 €

Year 202X+1

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 for the delivery of machinery for an amount of €500,000, half of which is collected at the time of delivery on June 1, 202X+1 and the remaining amount on June 1, 202X+2.

VAT accrued in the second quarter by machinery sale:

250,000 x 21% =€52,500 (the accrual is produced with the collection)

Year 202X+2

The sales volume of 202X+1 exceeds €2,000,000 and is therefore excluded from the special cash basis regime.

Total amount of sales without VAT: 1,000,000 €.

All sales are made in cash except for the delivery of a property for an amount of €600,000, half of which is collected at the time of delivery on June 1, 202X+2 and the remaining amount on June 1, 202X+3.

VAT accrued in the second quarter 202X+2:

• 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 202X+3, you can again opt for the cash criterion since the sales volume does not exceed €2,000,000 if the rest of the requirements are met.

Example:

Year 202X

Total amount of sales without VAT: 1,000,000 €.

Year 202X+1

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 for the delivery of machinery for an amount of €500,000, half of which is collected at the time of delivery on June 1, 202X+1 and the remaining amount on June 1, 202X+2.

The exclusion will take effect on January 1, 202X+2.

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 202X+1: 250,000 x 21% = 52,500 €.
• VAT accrued in the second quarter 202X+2: 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:

Businessman A, under the special cash basis regime, delivers goods to company B in the first quarter of 202X for an amount of €600,000. Half of the price is charged on May 1, 202X and the remainder on May 1, 202X+2. When will company B be able to deduce the tax?

The right to deduct will arise on May 1, 202X for the amount paid (300,000 x 21% = €63,000) and on December 31, 202X+1 for the remaining amount (300,000 x 21% = €63,000).

Therefore, company B will be able to deduct contributions incurred amounting to €63,000 in the declaration for the second quarter of 202X and the remaining €63,000 in the declaration for the fourth quarter of 202X+1.

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 January 1, 202X+1, company A, under the general VAT regime and with a sales volume in 202X of less than €6,010,121.04, delivers goods to company B, under the special cash basis regime, for an amount of €100,000, the payment of which is deferred until May 1, 202X+1.

Upon maturity, company B does not satisfy the debt, so A decides to modify the tax base in accordance with the procedure provided for in article 80.Four of the VAT Law, issuing the corresponding corrective invoice on August 1, 202X+1. On August 10, 202X+1, company B receives the corrective invoice. What effects will it have on the third quarter declaration?

January 1, 202X+1:

- Company A (general regime) will have charged VAT for an amount of €100,000 x 21% = €21,000, paying the tax in the declaration corresponding to the first quarter of 202X+1.
- Company B (cash basis scheme) will not have deducted the quota of input VAT. The right to the deduction will arise on May 1, 202X+1 or December 31, 202X+2 if payment has not been made.

July 1, 202X+1

- After six months from the accrual without obtaining collection, company A classifies the credit as uncollectible and modifies the tax base, issuing a corrective invoice on August 1, 202X+1.
- Company B receives the corrective invoice on August 10, 202X+1:
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, declared bankrupt and subject to the special cash-basis regime, presents the following data on the date of the order (March 1, 202X):

-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 declaration for the first quarter of 202X, pre-bankruptcy period, you must include:

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, 202X, company A, under the special cash basis regime, delivers goods to company B, under the general VAT regime, for an amount of €100,000, the collection of which is deferred until May 1, 202X. 
On February 1, 202X, an order declaring company B bankrupt is issued. What effects will it have for both companies?

Company A must include in its declaration for the first quarter of 202X an output VAT of €21,000 even though the credit is pending collection.
Company B must deduct the VAT amount of €21,000 in the pre-bankruptcy declaration for the first quarter of 202X.

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 that same day, December 31, the corresponding modification of the tax base can be made, issuing a corrective invoice that can be recorded in the last declaration-settlement of the year 202X+1.

The operations are the following:

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.

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:

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.

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