The European Commission decided this Wednesday to take Spain before the Court of Justice of the European Union for not having transposed two directives related to VAT. All EU Member States were required to put into force the legislation necessary to transpose these directives by 31 December 2024. Two letters of formal notice were sent to Spain on 31 January 2025, followed by reasoned opinions on 17 July 2025. However, Spain is the only Member State that has not done so. The Commission asks the Court to fine Spain.
One of the directives refers to changes in the VAT rules applicable to small businesses (SMEs) and the self-employed with the aim of reducing VAT compliance costs for SMEs, reducing the negative impact of the threshold effect; and facilitate compliance by SMEs and monitoring by tax administrations. It refers to SMEs and self-employed workers with an annual turnover of less than 85,000 euros.
According to the Commission, Spain has indicated that it does not intend to apply the VAT exemption for SMEs established in the Directive, since the application of the exemption is optional for Member States. However, the European institution emphasizes that “although this is possible, Spain should transpose the provisions that allow SMEs established in Spain to apply the exemption regime in other Member States. This is necessary since, for an SME established in Spain to obtain the exemption elsewhere in the EU, it must first register with the Spanish authorities.”
The self-employed organization ATA, which asked the European Commission to sanction Spain for not transposing this directive, explained that this new European standard “allows Member States to establish an annual turnover threshold of up to 85,000 euros, below which self-employed workers and SMEs would be exempt from charging, settling and declaring VAT.” In exchange, self-employed workers give up deducting VAT from their expenses.
The other directive to be transposed modifies the mandatory provisions that Member States must transpose in relation to the place of provision for VAT purposes of certain services when they are transmitted continuously or offered virtually in another way, and the special VAT regime applicable to second-hand goods, objects of art, antiques and collectibles.
The Commission points out that “the failure of Spain to transpose the provisions relating to the place of provision entails the risk of double taxation or non-taxation, since the other twenty-six Member States have transposed the directive and different rules will apply.”
Delay of the Ministry of Finance
When elDiario.es asked the Treasury about the non-transposition of this directive, the Ministry headed by María Jesús Montero assured that “the directive is pending transposition, but the idea is to meet the deadlines.” However, the modification of the directive establishes that it would have to be approved in EU countries “as of January 1, 2025.”
At the same time, the Treasury argued that there are other tax regimes in Spain that make it meaningless to apply this VAT exemption to self-employed people who earn less than 85,000 euros.
“In Spain, since 1986, the year in which the tax was established in Spain, it has been decided to apply other different regimes for small businesses such as the simplified regime or the equivalence surcharge regime that are coordinated with the module regime in the personal income tax. Therefore, it does not seem that it makes much sense to reformulate the taxation in one tax and not say what will happen in the other,” they declared from the Ministry of Finance.
Source: www.eldiario.es
