The self-employed who invoice up to 85,000 euros per year may choose to benefit from the next VAT franchise regime that will exempt them from the obligation to include VAT on invoices issued and present the corresponding quarterly statements of the tax. This is one of the measures on which there is already a full consensus among the representatives of the Ministry of Finance, the Tax agency and the organizations CEOE, Cepyme, CCOO, ATA, UATAE and UPTA that participate in a working group created at the end of August within the Institute of Fiscal Studies (IAE), according to sources of the negotiation have advanced to EL PERIÓDICO.
It is estimated that more than a million self-employed they invoice below the threshold of 85,000 euros, although the new optional regime of franchised VAT may not be interesting for all of them; Depending on the type of business, it may be more advantageous to invoice with VAT and declare the tax. The reform stems from a community directive that should enter into force in 2025, but the aforementioned working group is debating how and to whom to apply the new regime in Spain.
Module regime
The aforementioned working group was established with the objective of carrying out a proposal for regulatory modifications with its corresponding calendar on the tax regime for the self-employed and SMEs. The main conclusions of this recommendation report, in the drafting of which the General Directorate of Taxes of the Ministry of Finance, also includes the definitive elimination of the current regime of objective estimation of personal income tax (module scheme), transiently and gradually throughout ua period of three years. Some 355,000 taxpayers with activities in sectors such as the hotels, shops, hotels, taxis, schools, dry cleaners, hairdressers and other businesses whose full income does not exceed 250,000 euros per year. In principle, the module regime option would not be suppressed for agricultural and livestock activities.
To undertake this reform there is an antecedent of the Navarra state treasurywhere the objective estimation regime of personal income tax was abolished with effect from 2021 and a special direct estimation system was launched for the self-employed with a turnover of less than 150,000 euros (300,000 in the case of agricultural, livestock, forestry or fishing).
In 2024 or in 2025
The mixed working group Treasury-self-employed organizations plans to issue its report on recommendations in April (At the time of its constitution, a period of six months was given). Some representatives of the group consider that the works would allow to promote the legislative change starting in April in order to be able to apply as early as January 2024 the new VAT franchise regime -which would exempt natural persons from the tax with a turnover of up to 85,000 euros or 100,000 euros if intra-community operations are included). The Ministry of Finance, however, prefers not to talk about close deadlines and recalls that the community directive that includes this VAT regime -which already exists in all EU countries, except Spain- does not enter into force until 2025. In addition, the Ministry of Finance recalls that the conclusions included in the report are only recommendations, and do not bind the Government.
The truth is that the General Director of Tax Management of the AEAT, Rosa Prieto, referred this Tuesday to the fact that there is “unanimity” within the aforementioned group of the Institute of Economic Studies in favor of implementing the VAT franchise regime. During his speech at a table on taxation within the IV Entrepreneurs and Self-Employed Forum organized by ATA, Prieto explained that the Treasury is studying with the self-employed organizations to apply this regime by which small businesses could be released from declaring VAT. From his point of view, this system and the assistance from the AEAT “would make it easier for the self-employed to comply with their tax obligations and not be afraid to give that jump to direct estimate“which would mean the elimination of the regime of modules in the personal income tax.
Who benefits?
Prieto made no reference to the fact that the scheme could be applied to the self-employed with incomes of up to 85,000 euros: “the characteristics can be decided”, he limited himself to affirming. She was the vice president of the Association of Self-Employed Workers (ATA), Celia Ferrero, who referred to the billing threshold of 85,000 euros (100,000 euros if there are intra-community operations) that appears in a summary document to which EL PERIÓDICO has later had access.
“The most important is the reduction of formal obligations that would occur in a regime such as the franchised VAT”, agreed in pointing out both Celia Ferreroas Rosa Prieto and the other people who participated in that discussion table: the Minister of Finance of Navarra, Elma Saiz; the deputy secretary of Economy of the PP, john bravoand the professor and lawyer javier martinof F&J Martín Abogados.
In a franchised VAT regime, the self-employed would no longer have to submit quarterly tax returns, although they would still be subject to an exhaustive annual informative return on all their operations.
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“Does it have advantages? It all depends on the type of activity?”, explained Professor Javier Martín. “If I have an activity with very little supported VAT, then I am very interested in the franchise regime, because I will not have to have an impact and I have very little to deduct. If my activity has a lot of supported VAT, the franchise regime does not interest me. We will have to see case by case, but for a large majority of self-employed workers it is a regime that will undoubtedly be beneficial,” he concluded.