Important Tax Changes in Spain regarding VAT

The VAT package (new rules contained in Directive 2008/8/EC
and Directive 2008/9/EC) and anti-tax fraud measures (Directive
2008/117/EC) will be implemented in Spain as of 1 January 2010.
Although the legislation has not been approved yet, it is
expected that it will be published before the end of the year.
The main changes contained in the VAT package refers to the
place of supply of services, new reporting obligations in
connection with intra-Community services which fall under the
reverse charge mechanism and the refund of VAT to taxable
persons not established in the Member State of refund but
established in another Member State.

Place of supply of services
Until now, the supply of services was subject to Spanish VAT if
the supplier was established in Spain. This general rule in practice
was applied only to a limited number of services such as the
leasing of transport means, hotels and other services that were
not under the special rules.
The special rules referred to a large number of services, so they
were applied in most of the cases. The special rules applicable to
professional services, telecommunication services and services
rendered by electronic means set forth that the place of supply
was where the recipient was established. These rules are generally
applied as of 1 January 2010 (although with certain requirements).
With the new system, in order to apply the rules for the place
of supply of services, it is necessary to determine if the services
are supplied to a business or to an individual. In the first case, the
place of supply is where the recipient is established. In the second
case, the place of supply is where the supplier is established.
However, in connection with a great number of services, if the
individual resides in a third country or territory, the services are
not subject to Spanish VAT (except if he resides in the Canary
Islands, Ceuta or Melilla).
The new rules for the place of supply of services are
completed with the generalisation of the reverse charge rule.

New reporting obligations
As of 1 January 2010, the taxable persons that intend to supply or
receive intra-Community services in Spain to which the reverse
charge rule applies should be included in the Spanish Register of
intra-Community operators (VIES).
The recapitulative statement of intra-Community operations
(Form 349) will include the intra-Community supply and the
acquisition of services subject to the VAT of the Member State in
which the recipient is established (that is, to which the reverse
charge rule applies).
The recapitulative statement of intra-Community operations will
have to be filed monthly. However, if the volume of intra-
Community supplies of goods and services does not exceed 100.000
Euros per quarter, the return has to be filed quarterly, for 2010 and
2011. For future years, the threshold will be 50.000 Euros per quarter.
As soon as the threshold is surpassed, the return will have to be filed
monthly.

VAT refund
There are new rules for the refund of VAT to taxable persons not
established in the Member State of refund but established in another
Member State.
In order to obtain a refund of VAT borne in a Member State,
the taxable person not established in that Member State of refund,
should file an electronic refund application via the electronic portal
set up by the Tax Administration of the Member State in which he
is established. The refund application will be sent by the Member
State of establishment to the Member State of refund.
The new system will be applied to the refund applications
submitted as of 1 January 2010.