A new law package - Law 7/2012, dated 29 October and called "Approving Measures to Prevent and Combat Tax Fraud" - came into effect in Spain on 31 October 2012, introducing a significant number of measures to prevent and combat tax fraud. The package contains the following important changes on VAT and other indirect taxes.
Application of the Reverse Charge Systems to new cases:
- In real estate transactions when (a) the VAT exemption is waived and VAT applies on second sales of real estate; and (b) the sale takes place due to the execution of a guarantee or due to a transfer in lieu of payment of real estate
- In real estate building and restoration works executed as a consequence of contracts agreed between the developer and the main contractor (it may include other subcontractors as well)
- New rules in insolvency procedures, addressed to ease VAT credit management by the tax authorities and to maintain VAT neutrality. The measures include the need to file two separate VAT returns: one for the transactions which occurred before the insolvency declaration and another for the transactions which occurred after the Declaration, so that both potentially arising VAT credits can be clearly identified separately.
- New case of VAT infringement when assimilated imports are not correctly reported through the relevant forms
- New VAT or Transfer Tax when selling shares of real estate-oriented companies (companies for which real estate assets represent more than 50 percent of total assets)
These sales of shares were previously subject to the Transfer Tax when the buyer acquired/increased the control over these real estate companies. This provision has been substantially amended, such that only those sales of shares projected for tax avoidance purposes (i.e., whose real purpose is selling the underlying real estate while avoiding VAT or Transfer Tax) will be subject to the applicable VAT or Transfer Tax.
In addition, the rules to define "real estate companies" have been changed, too. In particular, real estate for use in business activities is no longer counted in order to qualify the company as a "real estate oriented company."