Briefing note

Effective as of 1 January 2014, article 23 of Act 14/2013, of 27 September, supporting entrepreneurs and their internationalisation, introduced the Special cash accounting regime in Chapter X of Title IX, of Act 37/1992, of 28 December, on Value Added Tax (art. 163 decies onwards)

This new Special regime, which is optional, allows taxpayers to delay the accrual and the subsequent tax return and payment of output VAT up to the time that their customers are charged, although this will also delay the deduction of input VAT on acquisitions up to the time that their suppliers are paid (double cash accounting criterion);all this will be limited to December 31 of the year immediately following that in which the operations are undertaken.

The main characteristics of the Special Scheme on cash basis are:

  • Subjective requirements:

Taxpayers eligible for this special regime are those whose volume of operations during the previous calendar year has not exceeded 2,000,000 euros, understanding that operations are carried out when the VAT would have been due if the special regime had not been applied.

Taxpayers whose cash collections with the same recipient during the calendar year exceed 100,000 euros are excluded from this.

  • Optional regime:

The regime can be applied by taxpayers who meet the above requirements and who choose to apply it when filing their start of activity declaration, or in the tax register declaration, during the December prior to the start of the calendar year in which it should become effective.

For 2014, the special cash-accounting regime can be applied throughout December 2013 and in the first quarter of 2014, becoming effective during the first settlement period after the date on which it was executed.

The option will be understood to be extendable until it is renounced.This renunciation will be valid for a minimum of 3 years.

The renunciation of or exclusion from the regime will determine the maintenance of the regulated standards in the same with regard to operations undertaken during its validity.

  • Objective requirements:

The special regime will refer to all the operations undertaken by the taxpayer in the territory in which the tax applies

The following are excluded:

a) Being under the agriculture, stockbreeding and fishery simplified special scheme, the special scheme for the surcharge of equivalence, for gold as investment, applicable to the services carried out electronically and for a group of organisations.

b) The exempt deliveries of goods referred to in articles 21, 22, 23, 24 and 25 of this Law (exports and intra-Community deliveries of goods)

c) Intra-Community acquisitions of goods;

d) Those in which the taxpayer is the employer or professional for whom the operation is carried out as established in article 84.One.2nd, 3rd and 4th (taxpayer investment of the taxpayer).

e) Imports and operations similar to imports.

f) Those referred to in articles 9.1st and 12 (self-consumption of goods and services)

  • Content of the regime:

-The tax will be accrued:

• 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.
When receiving payment, either total or partial, the taxpayer must provide proof of the price of the operation.

- It must be charged when issuing and delivering the invoice, but it will be considered completed when the transaction has accrued.

- Taxpayers using the regime can apply their deductions under the terms established in Section VIII of the Value Added Tax Act, with the condition that 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 the one in which the operation was performed, if the payment has not been made

When receiving payment, either total or partial, the taxpayer must provide proof of the price of the operation.

- The specific formal obligations of this regime are as follows:

The record book of invoices issued must include the transaction invoice date, and separately indicate the corresponding amount, as well as the bank account or payment method used.

The record book of invoices issued must include the transaction payment date, and separately indicate the corresponding amount and the payment method used.

The invoices issued must include the mention 'Special cash accounting regime'

Form 303 must include all information on transactions carried out, following the general criteria of VAT accrual.

  • Recipients of the transactions affected by the regime:

In the case of taxpayers not under the regime but who are recipients of operations included in it, the right to the deduction of the fees borne by those operations 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 the one in which the operation was performed, if the payment has not been made

With respect to formal obligations, the record book of invoices issued must include the transaction payment dates, indicating the corresponding amount and payment method separately.

  • Modification of the tax bases in Article 80. Four of the Value Added Tax Act (LIVA)

The modification of the gross tax base because of uncollectable credits, by taxpayers who are not using the special cash accounting regime, will result in the deduction of the charges made by the liable taxpayer attached to said special regime, corresponding with the modified transactions still pending deduction.

With respect to modifying the gross tax base because of uncollectable credits, by taxpayers who are using the special cash accounting regime, a special regulation has been introduced to declare an uncollectable credit when it accrues in application of the deadline of 31 December in the year immediately following the transaction execution date.A three-month period for making the modification is calculated as of the deadline of 31 December.

  • Effects of the notice of commencement

A notice of commencement of a taxpayer under the special cash-based regime will determine, on the date of the court order giving notice of commencement, the payment of the quotas affected and the deduction of the quotas borne with regard to the operations that come under the regime, that were still pending payment or deduction.

Standards contained in articles 163 decies to 163 sexiedecies of Act 37/1992 (wording of Act 14/2013, of 27 September, on supporting entrepreneurs and internationalisation - Official State Gazette of 28 September), in articles 61 septies to 61 undecies, sections 3, 4 and 6 of article 63, sections 4 and 5 of article 64, section 5 of article 39 of Royal Decree 1624/1992, in section 6 of letter b) of article 5, letter c) of section 3 of article 9 of Royal Decree 1065/2007, in letter p) of article 6.1, section 3 of article 11 of Royal Decree 1619/2012 (wording of Royal Decree 828/2013, of 25 October - Official State Gazette of 26 October).

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