VAT Special Regimes: Agriculture and Equivalence Charge
Monthly Return
The 2008 reform introduced the option for a monthly settlement period. The conditions or requirements are:
- Be registered in the Tax Agency’s monthly returns register.
- Be current on tax obligations.
Consequences:
- A monthly settlement period in which a refund can be claimed.
- Filing self-assessment electronically.
- Filing an information record book.
Special Schemes
1. Agriculture System
Its regulation is in article 124. It refers to the primary sector of the economy, and waiver applies unless otherwise specified by the subject.
Budgets:
- It applies to owners of farms, livestock farms, fishing farms, and forestry operations.
- It does not apply to corporations.
- The turnover does not exceed certain amounts, and purchases do not exceed certain amounts.
- The products are natural products of the farm and are not intended for industrial or commercial activities by the farm owner.
Lump Sum Compensation: The farmer is entitled to a lump sum compensation, which in some cases is 10% and in others 8.5%, on the price of products sold to businesses.
Who pays the compensation? Generally, the employer purchasing natural products pays. In exports, it is paid by the Treasury.
The employer who buys from a farmer is entitled to deduct the compensation paid with the taxes charged on the regular schedule.
Regarding the procedures of the scheme: A receipt is issued by the employer/buyer, which includes the compensation and should be signed by the farmer. The farmer should keep a special record book that collects the receipts of the operations of the scheme, similar to an invoice book. The farmer does not self-assess and does not pay anything.
2. Equivalence Charge System
Its regulation is in article 148. It is a statutory scheme.
Budgets: It is applied to retailers who are natural persons and do not market products outside the regime, which are contained in article 59 of the regulations, such as vehicles, boats, aircraft, jewelry, furs, oil, industrial machinery, building materials, and others.
Regarding the charge of equivalence:
- Supplier entrepreneurs have a duty to pass on the equivalence charge in the supply of goods to retailers.
- Retailers have a duty to pass on the tax to their customers in sales (although the fee is not passed).
- The retailer may not deduct input tax on purchases.
Quantification: The base is the same amount as the ordinary VAT base. The rate or percentage of the surcharge will be 4%, 1%, or 0.5%, depending on whether the goods are subject to the general rate, the reduced rate, or the super-reduced rate.
The duties of the provider are included in their self-assessment and input along with the fee or tax of their own business. The impact and the charge are quantified in conjunction with the regular tax share on the same bill. For example, if a retailer buys a good for 100…
When retailers buy from their provider, along with normal VAT, they are charged a surcharge (4%). For example, 118 + 4 = 122. If it were a regular transaction, it would be 118. If the provider’s price is 150 + 27 = 177.
When the retailer sells to a customer, they charge the purchase price plus VAT (there is no VAT self-assessment for Finance). So, what is the significance of this contrast in the surcharge and interest? What does this equivalence mark represent? It represents the share of VAT to be entered. What invoice does the buyer make to their service provider? What invoice does the customer make when they sell? What is the invoice for the Treasury? 18% is the general VAT type.