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Vicente Bootello |
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José Ignacio Ripoll |
In the second half of this year, the Spanish government has been carrying out an important reform of several aspects of the Spanish tax system. This governmental reform is expected to affect, among other taxes, corporate tax, for which the most noteworthy change is the possibility of reducing the shareholding stake required to form a consolidated tax group.
There are also changes to non-resident income tax, for which it has been proposed to increase the tax rate applicable to income from movable capital and capital gains, and personal income tax, for which it has been proposed to increase the tax rates applicable to the savings component of income. However, we will discuss the final outcome of these changes in upcoming issues.
Two other issues have grown in importance in recent months: the approval of the law on October 26 2009 regulating Spanish listed corporations for investment in the real estate market (SOCIMIS) and the bill reforming Value Added Tax. The corporate regime for Spanish REITS (in advance SOCIMIS) has not undergone important changes (as compared to the bill analysed in previous issues).
Thus, it applies the same requirements in relation to the corporate purpose (which must mainly be to acquire and develop urban real estate for rental purposes or to hold stakes in other SOCIMIS or similar institutions), the obligation to be listed on a regulated market (of Spain or of any other EU member state or member of the european economic area), and the minimum capital (which must be €15 million ($22.4 million), divided into shares of a single class).
There have also been changes to the Spanish tax regime. The most noteworthy aspects are that the Spanish corporate income tax rate will now be 18% (with a few exceptions), that the SOCIMIS will be taxed on dividends distributed and only when distributed, that this regime will be incompatible with the consolidated tax regime, or that it provides for the possibility of applying the reinvestment tax credit.
Moreover, this law has been used to unify the VAT rate applied to leases with a purchase option on homes and the rate applicable to the supply of a new home, which is 7%.
Along these lines, as discussed, a bill is being processed in Spain to make certain other changes in VAT. As it stands, the preliminary bill introduces two main changes in VAT legislation:
As from January 1 2010, the general rule for the place of supply of services (at present the place where the supplier is established) would be amended and the reverse rule would apply, that is, services would be deemed to be supplied where the recipient is established, unless the recipient is the final consumer (that is, not a trader or a professional). Thus, the place-of-supply rule for services to traders (where the recipient is established) would become the general rule, and would entail amending certain special provisions that rely on this rule.
The modification of the procedure for refunding VAT borne in other EU member states. Traders established in Spain would be able to claim refunds of the foreign input VAT through the Spanish state tax agency's website, and EU traders not established in Spain would be able to claim refunds of the Spanish VAT they bear through the electronic portal that their own tax authorities should set up for these purposes.
Lastly, new developments being considered by the government include an increase in VAT rates from the standard 16% to 18%, and from 7% to 8% for transactions subject to a reduced VAT rate.
Vicente Bootello (vicente.bootello@garrigues.com)
José Ignacio Ripoll (jose.ignacio.ripoll@garrigues.com)
