Welcome

 

EU - VAT – Commission takes steps against Spain regarding its rules to determine the taxable amount of VAT in case of barter transactions

Certain rules applied in Spain to ascertain the taxable amount of VAT for barter transactions (in particular, where the transaction involves the acquisition of a future building) are, in the opinion of the Commission, in breach of Community Law.



 

In Spain, when a future building or part thereof is sold and paid for prior to its final construction, VAT is charged at the time the payment is made, and the taxable amount is the amount actually paid. No additional VAT is levied at a later stage when, upon final construction, the building is delivered to the purchaser. This is in conformity with the VAT Directive.

However, in the same situation, if the advance payment of the planned building is made in kind (for example, if the purchaser of the planned building pays by supplying a piece of real state) the taxable amount for the purposes of VAT is different. In that case:

  • VAT is levied when the advance payment is made on the basis of the market value foreseen for the building once it has been constructed;

  • if, once construction is over, the market value of the building is higher than foreseen, a correction of the taxable amount initially calculated must be made and the purchaser of the building is requested to pay VAT on the difference.

The Commission understands that the product supplied is identical in both transactions and that only the means of payment are different. According to the European Court of Justice, using different means of payment for acquiring a product cannot lead to a different VAT liability.

For these reasons, the Commission has formally requested Spain to change its administrative practice by means of a reasoned opinion.

Source : Europe - Press Release, dated 03/04/2008

 

Privacy Policy|Disclaimer|Advertise|Sponsor

Copyright © 2001 Sriviven Software

Site Optimized for view with IE5+ 800 * 600