The Spanish tax authorities criterion on VAT in Flexible Compensation Plans

The General Directorate of Taxes (GDT) from the Spanish Ministry of Finance has resolved, in its Binding Consultation 0366 – 19, of February 20, which has to be the VAT treatment in relation to Flexible Compensation Plans that companies grant to their employees.

Certain benefits are considered as subject to and not exempt from VAT, such as the use of companies’ vehicles, or the grant of restaurant vouchers, which involve, besides the obligation of charging VAT with a formal invoice, its accounting in the VAT Registry books. Other benefits are considered as VAT exempt, such as medical or life insurances, nursery service or training courses.

The fact of carrying out VAT subject and exempt activities leads the GDT to conclude on the application of the pro – rata system in order to determine the company’s deductible input VAT. This criterion implies a new aspect to take into account by employers upon establishing this kind of compensation systems for their employees.

VAT in Flexible Compensation Plans

✔ Fringe benefits granted by employers are considered as made for consideration, since they are done in compensation of the services granted by employees. The granting of such benefits is mandatory for employers if they are agreed in the labour contract and the employee elects to such remuneration system, so that a fraction of the employment service is the counterpart of the benefit.

✔ Once determined that such transactions are subject to VAT, the following cases must be distinguished, on the basis that it must be considered that the employer has received and rendered itself such services:

  • Nursery services and medical insurance: they are VAT exempt.
  • Training courses: these are also considered as VAT exempt if the subject areas are included in any study plan of the Spanish educational system, according to the criterion of the Ministry of Education and Professional Training.
  • – In relation to restaurant vouchers, if they can only be changed in restaurants located in the Spanish VAT territory (TAI), they shall be considered as single – purpose vouchers, of which each transfer is considered as the provision of the underlying service by the transferor, irrespective of whether it is the issuer or another entrepreneur. Consequently, if the underlying transaction is subject to VAT in the TAI, the transfer of the voucher is also subject to VAT in such territory. It, therefore, implies that the delivery of restaurant vouchers by the employer company to its employees qualifies as a fringe benefit subject to a 10% VAT rate.

✔ Last but not least, the GDT considers the pro – rata system as applicable, in order to determine the VAT deductible quotes, as the company carries out VAT – exempt transactions, (such as medical insurance, nursery services or training courses) as well as subject to VAT transaction (restaurant vouchers). For the same reason, the GDT deems as appropriate checking on the eventual application of the VAT deduction based on the special system by sector of activity.

CONTACT

MADRID
Pedro Teixeira 8, planta 4ª, 28020
T+34 91 192 21 22

BARCELONA
General Mitre 28-30 08017.
T+34 93 363 65 10

Based in Barcelona and Madrid. Englobally is our Latin American business partner established in Santiago de Chile.

We are also part of Englobally Group, an international association of independent accounting and advisory firms that provide a one-stop shop managed solution for accounting, payroll and HR needs, with member firms in over 25 countries and associates working in many others. Many fast growing technology and lifescience businesses find their international services invaluable. Companies in many other sectors are attracted by the close and supportive way Englobally Group works.

Name

E-mail

Message

Please type the code below

captcha

  • Este sitio web utiliza Cookies de terceros y de análisis, para recopilar información con la finalidad de mejorar nuestros servicios, así como para analizar sus hábitos de navegación. Si continúas navegando, supone que aceptas expresamente la instalación de las mismas. Tienes la posibilidad de configurar tu navegador pudiendo, si así lo deseas, impedir que sean instaladas en tu dispositivo, aunque deberás tener en cuenta que dicha acción podrá ocasionar dificultades de navegación de la página web.

  • De conformidad con lo establecido en la normativa vigente en materia de Protección de Datos de Carácter Personal, le informamos que sus datos serán incorporados al sistema de tratamiento titularidad de PROFESSIONAL BOOKKEEPING SERVICES S.L. con CIF B59830638 y domicilio social sito en RONDA DEL GENERAL MITRE 28 08017, BARCELONA, con la finalidad de atender sus consultas. En cumplimiento con la normativa vigente, PROFESSIONAL BOOKKEEPING SERVICES S.L. le informa que sus datos serán conservados durante el plazo estrictamente necesario para cumplir con las acciones mencionadas con anterioridad.

    Salvo comunicación contraria por su parte, entenderemos que sus datos no han sido modificados, que usted se compromete a notificarnos cualquier variación respecto de los mismos, y que usted da su expreso consentimiento para que PROFESSIONAL BOOKKEEPING SERVICES, S.L. utilice los mencionados datos para las finalidades mencionadas.

    PROFESSIONAL BOOKKEEPING SERVICES S.L. le informa que procederá a tratar los datos de manera lícita, leal, transparente, adecuada, pertinente, limitada, exacta y actualizada. Es por ello que PROFESSIONAL BOOKKEEPING SERVICES S.L. se compromete a adoptar todas las medidas razonables para que estos datos se supriman o rectifiquen sin dilación cuando sean inexactos.

    De acuerdo con los derechos que le confiere la normativa vigente en materia de protección de datos podrá ejercer los derechos de acceso, rectificación, limitación de tratamiento, supresión, portabilidad y oposición al tratamiento de sus datos de carácter personal, así como del consentimiento prestado para el tratamiento de los mismos, dirigiendo su petición a la dirección postal indicada más arriba o al correo electrónico info@pbs.es.

    Podrá dirigirse a la Autoridad de Control competente para presentarla reclamación que considere oportuna.

    El envío de estos datos, implica la expresa aceptación de esta cláusula.

  • Pursuant to current Personal Data Protection Regulations, you are hereby informed that your data will be included in a processing system owned by PROFESSIONAL BOOKKEEPING SERVICES S.L. with Tax ID No. B59830638, with its registered address at RONDA DEL GENERAL MITRE 28, 08017 BARCELONA (SPAIN), in order to deal with your questions and requests. In compliance with current regulations, PROFESSIONAL BOOKKEEPING SERVICES S.L. hereby informs you that your data will be kept for as long as is strictly necessary to complete the aforementioned action.

     

    Unless otherwise stated, we will consider that your data have not been modified, that you undertake to inform us of any modifications thereto, and that you give your express consent for PROFESSIONAL BOOKKEEPING SERVICES, S.L. to use said data for the specified purposes.

     

    PROFESSIONAL BOOKKEEPING SERVICES S.L. informs you that it will proceed to process your data in a lawful, loyal, suitable, relevant, limited, exact and updated manner. Therefore, PROFESSIONAL BOOKKEEPING SERVICES S.L. undertakes to apply all reasonable measures to ensure that any incorrect data are deleted or corrected without delay.

     

    According to the rights granted to you under current data protection regulations, you will be entitled to exercise your rights of access, rectification, limitation on processing, suppression, portability or opposition regarding the processing of your personal data and your consent to the same, by addressing a written request to the postal address provided above or to the email address info@pbs.es.

    By sending these data, you are expressly accepting this clause.