VAT Application Management: Key Obligations
VAT Application Management
1. Statements Census
The census of entrepreneurs is part of the census of taxpayers, regulated in the Tax Code and the Regulations of the Tax Inspectorate. Statements include declarations of commencement, modification, and cessation.
- Commencement (High): Notifies the administration of the start of economic activity.
- Modification (Change): Reports changes to the registered data.
- Cessation (Low): Indicates the effective end of the activity.
2. Invoices
Invoice regulation is found in the 2003 Royal Decree (RD) on turnover. VAT documentation includes invoices, tickets, documents proving the import tax regime, and receipts from agriculture.
Taxpayers are required to issue and keep invoices. The obligation to issue an invoice arises in these situations:
- Deliveries of goods or services by the business.
- When the recipient is a business owner or professional.
- When the recipient requests the invoice to deduct the tax.
Tickets can substitute invoices. They are commonly used for retail sales, toll roads, transport, and hotels. A ticket must contain a description of the transaction, the consideration, and the tax rate or the term “VAT included.”
There is a duty to keep invoices received and the duplicates of the invoices issued for the statute of limitations period, which is 4 years.
3. Record Books
Taxpayers must keep a book of invoices issued and a book of invoices received.
- Book of invoices issued: Must include the identification of the recipient, the consideration, the output tax amount, and the date of issue.
- Book of invoices received: Must include the identification of the vendor, the consideration (price), the deductible VAT amount, and the date of receipt.
- Special Agriculture Scheme: Farmers must keep a book recording the operations under this scheme.
4. Tax Assessment
In the VAT mechanism, a self-assessment must be submitted at the end of each settlement period. The settlement period is generally quarterly, although there are cases where it is monthly.
The self-assessment should contain the sum of the output VAT and the amount of deductible input VAT. The 2008 reform introduced the option for a monthly settlement period under certain conditions. Additionally, the taxpayer must file an annual summary statement (Article 71.6), summarizing the data from all self-assessments for the calendar year.
5. Duty of Information on Operations with Third Parties
This is regulated in the General Regulations of the Tax Inspectorate of 2007. Taxpayers have a duty to report their transactions with third parties that may have tax consequences. They must file an annual statement of transactions with third parties, separately reporting deliveries and acquisitions of goods and services from the same person exceeding €3005.
6. Tax Revenue Sharing
This refers to the transfer to the Autonomous Community of part of the tax revenue (VAT) collected in its territory. The Autonomous Communities do *not* have regulatory powers regarding VAT.
Management and application of the tax remain with the Tax Office. The connection point with the Autonomous Community is the territorial consumption index, certified by the National Institute of Statistics.