Tax Newletter

Value Added Tax (VAT)

• Ruling of the Court of Justice of the European Union of 11 November 2021. Case C‑281/20. VAT. Directive 2006/112/EC. Right of deduction. Burden of proof.Invoice referring to a fictitious supplier.
  • According to the principle of fiscal neutrality, a taxable person must be refused the right to deduct value added tax (VAT) relating to the acquisition of goods supplied to that taxable person where he or she has knowingly mentioned a fictitious supplier on the invoice which that taxable person him- or herself has issued in respect of that transaction under the reverse charge procedure, if, taking into account the factual circumstances and the evidence provided by that taxable person, the information necessary to verify that the true supplier had the status of taxable person is lacking, or if it is established to the requisite legal standard that the taxable person has committed VAT fraud or knew or ought to have known that the transaction relied on as a basis for the right of deduction was connected with such a fraud.
• Ruling of the Court of Justice of the European Union of 21 October 2021. Case C‑396/20. VAT. Refund modalities. Taxable person not established in the Member State of refund. Directive 2008/9/EC.
  • Interpreted in the light of the principles of fiscal neutrality and good administration, Council Directive 2008/9/EC of 12 February 2008 precludes the tax administration of the Member State of refund, where it has become certain, in the light of additional information provided by the taxable person, that the actual input VAT liability, as mentioned in the invoice attached to the refund application, is higher than the amount indicated in that application, from refunding the VAT only up to the latter amount, without having first urged the taxable person, diligently and by the most appropriate means, to correct his refund application with an application deemed to have been submitted on the date of the initial application.
• Ruling of the Court of Justice of the European Union of 21 October 2021. Case C-80/20. VAT. VAT refund. Taxable persons established in a Member State different than the Member State of the refund. Directive 2006/112/EC.
  • The right to a refund of VAT on the supply of goods cannot be exercised by a taxable person who is not established in the Member State of refund, but who is established in another Member State, if that taxable person does not hold an invoice. Only if a document is vitiated in such a way as to deprive the national tax administration of the information necessary to substantiate a refund application is it possible to consider that such a document does not constitute an 'invoice' within the meaning of Directive 2006/112, as amended by Directive 2010/45.
  • An application for a refund of VAT for a given refund period cannot be refused on the sole ground that such VAT became chargeable during a previous refund period, insofar as it was not invoiced until that given period.
  • The unilateral cancellation of an invoice by a supplier, after the adoption by the Member State of refund of a decision rejecting the application for a VAT refund based on that invoice, and where that decision had already become final, followed by the issue by that supplier, during a subsequent refund period, of a new invoice corresponding to the same supplies, without the latter being called into question, has no bearing on the existence of the right to a refund of VAT which has already been exercised or on the period in respect of which that right must be exercised.
• Supreme Court Ruling of 13 October 2021. Appeal 3691/2020. VAT. General Tax Law (LGT). Imposition of penalty.
  • The penalty regulated in article 191.6 LGT that applies to the deferred filing of VAT tax returns to a subsequent quarter, in contravention of the requirements of article 27.4 LGT, does not violate EU law or constitutional principles, although the effect of applying the penalty rule results in a fine that is higher than what the taxpayer should pay for the non-timely filing without prior notice when, as in this case, the application of such a surcharge is not possible, because

  Personal Income Tax (IRPF)

• Query V2273-21 of 12 August 2021. Personal Income Tax. Form 151. Remote work.
  • The person asking the question is a worker subject to the special rules applicable to workers posted to Spanish territory for the 2017 to 2022 tax periods (barring resignation or termination). In March 2021, she changed jobs, joining a company located in Germany. Due to COVID, she could not move and had to work remotely. However, she intends to move to Germany in August 2021 to begin working in person. Her question is whether on form 151 (personal income tax return for taxpayers subject to the special rules applicable to workers posted to Spanish territory) for the tax period 2021, she must pay tax on all income earned during that period, that is, if in addition to the income earned through March from her employer in Spain, she must also include the income earned in her new job from the company in Germany.
  • Based on the information in the query, the taxpayer will live in Spain for more than 183 days in 2021, so the end of the posting to Spanish territory would not entail a change of tax residence in Spain for that year and the income earned from an activity carried out after the notification date of the end of the posting is not eligible for the special provision in the aforementioned article 93.2.b) of the personal income tax law (LIRPF), without prejudice to their taxation if the income in question is understood to have been earned in Spain pursuant to the provisions of the consolidated text of the Non-Resident Income Tax Law (TRLIRNR). If it is concluded that such earned income is not considered income earned in Spain, the taxpayer (who would be taxed as an IRPF 2021 taxpayer under the special rules in article 93 LIRPF), would not have to pay tax on that income. Only income from work that is directly or indirectly derived from a personal activity carried out in Spanish territory is subject to personal income tax in Spain.
  • Consequently, to the extent that the taxpayer does not perform the work in Spain (according to her letter, from August onwards), the income earned from the German company for work performed in Spain, as of the notification date of the end of the assignment, will not be considered earned in Spain and therefore she will not have to pay tax on that income when she files her personal income tax return on form 151 for 2021.