How can you offset your VAT if you have a group of companies? New features and advantages of the scheme
The VAT Law regulates a special regime that significantly simplifies the operations of groups of companies or entities and whose application, in certain cases, can represent a significant improvement in the management of their treasury.
The aim of this article is to introduce you to its characteristics, its advantages, and the latest developments in this field:
I.- CHARACTERISTICS AND FUNCTIONING:
– The Special Regime for Groups of Entities (REGE) is a voluntary regime and has a minimum permanence requirement of three years.
– It requires that the different entities be located in Spain and form a Group (it requires a financial link - the dominant company must have effective control of the rest -, economic and organizational link).
– It has two modalities, one in which it is possible to offset the balance to be refunded and paid that results in each of the entities subject to the regime (basic modality) and a second option, which recognizes the possibility of applying a series of special rules in the deliveries of goods and services between the entities of the group (advanced modality) and which allow reducing the taxable base in said operations.
II.- ADVANTAGES:
This system essentiallyallows you to optimize your treasury management. If you have a group of companies, you can offset the VAT returns of all of them. Offsetting the positive and negative VAT balances of your different companies will allow you to achieve significant financial savings. Furthermore, you can choose which companies participate in this special scheme, although the parent company will always be included. Additionally, its application eliminates the need for internal invoicing in certain cases.
The regime, especially in its advanced form, can be very interesting when some of the companies in your group carry out exempt activities and are subject to pro rata.
III.- NEW FEATURES:
Law 28/2014, reforming the VAT Law, has introduced important modifications to this special regime, effective from 01-01-2015, specifically:
• Companies whose activity is limited to the mere ownership of shares or equity interests are also considered dominant entities of the Group . • The existence of links in financial, economic, and organizational matters is incorporated . • Effective control of the dominant entity is understood to be the direct or indirect participation of more than 50% in the capital or voting rights of the subsidiaries throughout the calendar year.
Learn about other new developments in VAT regulations (The Tax Reform Law, VAT for Travel Agencies).
If your company is part of a group of companies, we invite you to consult us about your specific circumstances via email (ambit@ambitassessor.com) or at our offices.
We are experts in national and international taxation and would be happy to help you.
Marc Ivars. Tax Area
Àmbit Assesor
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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