Understanding Key VAT Concepts and Tax Regulations

VAT Taxable Event Delimitation

The following are subject to VAT:

• Supply of Goods and Services: For value, by employers and professionals, made within the scope of the tax, on a regular or occasional basis, irrespective of the intended purpose.
• Intra-Community Acquisition: For value, to the customer from another Member State, provided the transmitente is a businessman or professional.
• Imports: From countries outside the EU, in compliance with international treaties.

VAT Taxable Person

A natural or legal person obliged to file the tax settlement declaration.

VAT Exempt Transactions

Certain transactions are exempt from VAT:

• Transfer of Entire Estate or Business: The transmission of the entire estate or business of a taxpayer to a single customer, if this customer continues the exercise of business activities.
• Services to Worker Cooperatives: Services provided to worker cooperatives by their members.
• Supply of Money: The supply of money itself.
• Free Samples: Free samples of goods and services provided free of charge.
• Services by Dependent Workers: Services provided by dependent workers under labor-related regimes.
• Consumer Operations: Operations directly related to final consumption.
• Government Supply: Supply of goods and services made by the government.

Specific Exempt Services and Goods

Additionally, the following services and goods are typically exempt:

• Public Postal Services
• Hospital or Medical Care
• Assistance by Medical and Health Personnel
• Delivery of Blood
• Dental Services
• Social Security Services
• Public or Private Social Welfare Services
• Education and Teaching
• Stamped Paper and Official Documents
• Financial Operations
• Holiday Homes (under specific conditions)
• Patient Transport
• Insurance Operations
• Professional Services (certain types)
• Supply of Material Recovery (recycling)
• Religious Institutions (activities)

VAT Special Regimes

VAT applies under different special regimes:

• Voluntary Regimes:
  • Simplified Special Regime
  • Agriculture, Livestock, and Fisheries Regime
  • Special Regime for Used Goods, Works of Art, & Antiques
  • Special Regime for Gold Investment
• Mandatory Regimes:
  • Special Regime for Travel Agencies
  • Special Equivalency Surcharge Regime

VAT Taxable Base Calculation

The taxable base for VAT includes:

• Included:
  • Principal amount of the transaction
  • Commissions
  • Transport costs
  • Insurance costs
  • Subsidies directly linked to the price
  • Other taxes (except VAT itself)
  • Debts assumed by the recipient
• Not Included / Deductions:
  • Compensation payments
  • Discounts and rebates (commercial)
  • Specific supplements (if not part of the price)
  • Returnable packaging (deposits)
  • Subsequent bonuses
  • Sales returns
  • Non-payment of the passed-on fee (bad debts)

VAT Tax Rates

Different VAT rates apply based on the type of goods or services:

• Super Reduced Rate

  • Books, magazines, newspapers
  • Cars and prostheses for handicapped people
  • Public housing
  • Basic foodstuffs: bread, flour, milk, cheese, eggs, fruit, vegetables
  • Medicines

• Reduced Rate

  • Water supply
  • Meat
  • Flowers, plants, seeds
  • Housing (new construction)
  • Animal drugs
  • Motorcycles
  • Passenger transport
  • Hotel services
  • Funeral services
  • Theaters, circuses, exhibitions, and trade fairs

• General Rate

  • Jewelry
  • Furs
  • Automobiles (non-handicapped)
  • Garage spaces (without housing)
  • Phone service
  • Perfume
  • Luxury yachts
  • Mobile phones
  • Game consoles
  • Televisions
  • Notebooks (laptops)

VAT Obligations for Taxpayers

Taxpayers must fulfill several obligations:

• Business Registration: Declare the commencement, amendment, and termination of business activities.
• Invoicing: Issue and deliver invoices for their operations and retain duplicates.
• Accounting and Record Keeping: Maintain proper accounting records, including:
  • Record Book of Issued Invoices
  • Record Book of Received Invoices
  • Record Book of Capital Assets
  • Record Book of Certain Intra-Community Transactions
• Information Provision: Provide regular information on their economic transactions with third parties.
• Settlement Declarations: Present relevant settlement declarations and pay the resulting tax amount, if any.
• Annual Summary Statement: Submit an annual summary statement.
• Representative Appointment: Appoint a representative for purposes of meeting obligations under this law when the taxable person is not established in the territory where the tax applies.

Quarterly declaration periods: April, July, October, January.