- The EU executive requests financial penalties for failing to transpose the directive that benefits the self-employed
- Spain argues that the exemption is optional, but Brussels demands it so that SMEs can compete in the EU
- The Government’s inaction prevents SMEs from benefiting from a simplified VAT scheme across the Union
Brussels is taking Spain to the European courts for failing to apply the European VAT directive. The European Commission reported this Wednesday that it will bring Spain before the Court of Justice of the European Union (CJEU) and is asking for a fine to be imposed for failing to incorporate into its national legislation the European directive that allows small businesses and self-employed individuals with a turnover of less than 85,000 euros to be exempt from paying VAT.
As part of its infringement procedure for the month of March, the EU executive reported that Spain has not properly transferred the VAT-related directive into its national regulations. What it establishes is that small and medium-sized enterprises apply a simplified VAT scheme.
According to Brussels, Spain informed the EU executive that it does not intend to apply the VAT exemption for SMEs as its implementation is optional for member states. “Even though this is possible, Spain is still expected to apply the provisions that allow SMEs established in Spain to enjoy the same exemptions as other member states,” the EU executive pointed out.
In this regard, it added that it is necessary for Spanish SMEs to be able to obtain the same type of tax exemptions as in any other member state. And for this to happen, the first step must come from the Spanish authorities.
The deadline for the Government to implement these regulations ended last December 2024; however, Spain did not report the implementation of these measures, according to Brussels. “The European Commission considers that the efforts of the Spanish authorities have been insufficient and, therefore, is taking Spain before the EU Court of Justice, with a request to impose financial sanctions,” the EU executive reported.
The application of this regulation not only aims to reduce the costs that complying with VAT taxation entails for small and medium-sized enterprises. Furthermore, it seeks to minimize distortions in competition at both national and EU levels and to facilitate corporate compliance with the tax administration.
The European Commission also warns that the Government’s failure to transpose this directive poses an additional risk of double taxation and non-taxation, considering that the remaining 26 member states have applied the rule.
The directive includes a special VAT scheme for second-hand goods, works of art, collectors’ items, and antiques. In addition, it includes a special VAT for streaming services or other forms of virtual distribution.
“The lack of transposition of measures related to the special VAT scheme applicable to second-hand goods, works of art, collectors’ items, and antiques can also lead to distortions of competition,” Brussels warns.
Source: elEconomista