Spain delays VAT Package changes
Thursday January 7, 2010
Tax authorities in Spain have announced that legislation implementing the new VAT Package changes will not be in place until March.
The changes were supposed to have been implemented in January 1st but a lower level resolution from the Spanish General Tax Directorate will be issued instead.
Experts believe that the delay in implanting the VAT Package changes could cause some legal uncertainty and make VAT compliance slightly more difficult for businesses in the interim.
However, the “force of attraction” rule has been removed from Spanish VAT legislation, effective from January 1st.
This means foreign companies including those with a permanent establishment in Spain will not be entitled to charge Spanish VAT to their customers and the reverse change mechanism will be applicable.
Under the force of attraction rule, foreign entrepreneurs with a permanent establishment in Spanish VAT territory were deemed “established” for all transactions taking place in Spain.
The Spanish government recently announced plans to increase the VAT rate by two percentage points later this year.