Modifications to the General Tax Law: Corporate Tax, VAT and Customs

Law 13/2023, published on May 24, introduces substantial amendments to the General Tax Law, Corporate Income Tax, Value Added Tax (VAT), and Customs. These changes aim to align Spanish tax legislation with Council Directives and combat tax avoidance practices. This article highlights the key legislative innovations and their impact on various tax domains.

• Amendments in the field of the General Tax Law:

The General Tax Law undergoes significant transformations, including the introduction of a new reporting obligation for legal entities to disclose the identification of their real owners. Additionally, a corrective self-assessment system is established, allowing taxpayers to rectify or complete previously submitted self-assessments. The legal regime is also modified to adapt to Spain's participation in the Multilateral Agreement on automatic exchange of information.

• Amendments in the field of the Corporate Income Tax Law:

Law 13/2023 brings amendments to Article 16 of the Corporate Income Tax Law, aligning it with the Anti-Tax Avoidance Directive (ATAD). Notably, the definition of operating profit (EBITDA) is adjusted to exclude income and expenses not included in the taxable base. This ensures that exempt income, such as dividends, transfer of shares, and income obtained through a permanent establishment abroad, does not affect the determination of operating profit. These changes will take effect from January 1, 2024.

• Amendments in the field of Value Added Tax and Customs Law:

The amendments to the Value Added Tax and Customs Law include modifications in the treatment of goods subject to excise duties and the rules on the place of supply of services. The import of goods from the warehousing system other than customs warehousing is treated as an assimilated import, simplifying its liquidation process. Additionally, the "effective use" rule no longer applies to financial and insurance transactions between entrepreneurs and professionals.

Stay informed about the latest tax regulations in Spain and understand the impact of these amendments on various aspects of taxation. Compliance with the updated laws is crucial for businesses and individuals operating within the Spanish tax system.