As has already been advanced in other recently published posts, the approval of the Preliminary Draft of the Entrepreneurs Law has come to the world with an endless number of telegram korean list measures to help this group, however, one of the most unique and that is generating the most debates, is the one that we are going to address again, next, and it is none other than the implementation of the "Special Regime of the Cash Criterion" , as the aforementioned text has named it.
Remembering…
Let us remember that it was Directive 2006/112/EC that allowed the payment, and therefore the liquidation of the VAT charged, to be delayed as the maximum date for its collection. This option was kept intact in the modification that Directive 2010/45/EU made to the first one, however, this second one was more ambitious and also set the VAT charged as its focus, so that if the VAT charged was liquidated at the time of collection, the VAT charged would be deducted when the payment had been made. This is what we already defined and it is mentioned in the Preliminary Draft of the Entrepreneurs Law as the “double cash criterion”.
Little has changed from what was already stated in the past about the operation of this precept and which, at this point, due to the continuous comings and goings that we read in the press day in and day out, we have all clearly assumed. But it has been the Preliminary Draft of the Entrepreneurs Law that has been responsible for delimiting the scenario – of the three possible ones – in which we are going to move, in addition to setting the certain date of entry into force of 01/01/2014 .
With this measure, Spain, which is still in the regulatory and development phase, is about to kick off this new special regime, a liquidation system demanded by self-employed workers and SMEs since time immemorial, not without its detractors who do not see it as a panacea for companies' liquidity problems.
How cash VAT works
The " Special cash basis regime " is one of the eight existing special regimes already established in the VAT Law itself.
The immediate consequence of this new special regime will be that whoever opts for it will be allowed to delay the accrual of the VAT quota charged until the time of collection , also deferring the deduction of the VAT incurred until the time of payment , and in both cases for those operations that are not excluded from the "Special regime of the cash criterion".
This method will mean a clear shift in the collection period by the AEAT and will also delay the VAT refunds that are requested , since it would not be sensible to refund amounts that have not been collected previously because this would lead to the same problem that the Tax Agency is already suffering from and which it intends to remedy.
Collections and payments: What happens when neither occurs?
This has been one of the great unknowns that the Preliminary Draft of the Entrepreneurs Law has come to reveal, because logically and with the tax collection spirit of the AEAT, even if it is not collected/paid, the obligation to settle the tax will not disappear .
For this purpose, the maximum date for accrual and the right to deduct for uncollected/paid fees is set as December 31 of the year immediately following the year in which the transaction was carried out.
The only thing that is being promoted, far from reducing payment terms and the rate of late payment, is precisely the opposite effect, although this time, protected by the provisions of the VAT Law. In any case, the Preliminary Draft could obviously undergo revisions and modifications until it is transformed into a Project and throughout the entire parliamentary process, finally giving focus to the problem by solving this inconvenience.