IMPORTANT INFORMATION: THE TIME TO RECOVER VAT PAID HAS BEEN EXTENDED

This week I make no apology for reproducing an article written by my good friend and one of the best tax lawyers whom I have ever met, Mr Jose Maria Garcia Guirao from Garrigues Alicante.

This article is specifically aimed at professionals and business persons who are VAT tax payers who will appreciate the main points of Mr Guirao’s article where he masterly reviews the substantial changes to VAT refunds following the recent resolutions of the Supreme Court of Spain and now also the new Orders from the Economic Administrative Central Court (TEAC).

To try to simplify an explanation of the changes, we could summarise that until now when a VAT payer (i.e. a professional, a company, or a business owner etc) paid a large amount of VAT (i.e. for the purchase of a business property or premises), he had 4 years to compensate the tax paid. After this period the right to request a refund of the rest of the VAT paid but not compensated was lost.

But the Spanish Supreme Court has recently determined that the principle of neutrality of the VAT tax should henceforth prevail over the legal deadline and time limits, and although the right to compensate the VAT paid may expire in 4 years; the right to recover the VAT paid but not deducted should not be forfeited. Therefore as per these new court Orders, now it is possible to claim back any VAT paid which could not be recovered in the previous 4 years. Thus there are 4 years to compensate the VAT/IVA and a further 4 years to claim back for the rest.

This is a matter of real importance and may be of benefit to many readers since if you have paid an important amount of VAT that you were not able to compensate after 4 years, now you will be able to claim for a refund for the rest of the VAT paid.

So if you, in the past years made any major purchase subject to VAT (e.g. perhaps purchase some premises, or purchase a business) and you have not been able to compensate all the VAT paid as previously mentioned, it is important for you to check if you are in a position to claim for the rest.

Finally I would like to thank Mr Jose Guirao for his article which we consider extremely interesting and potentially important to many clients.

If this is your case of the case of someone you know please do not hesitate to contact us.

The information provided on this article is not intended to be legal advice, but merely conveys general information related to legal issues.

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