1 Cases of exemption and non-subjection

EXEMPTION: those in which, despite the taxable event being carried out, the law
exempts from compliance with the main tax obligation.
NON-SUBJECTION: the taxable event does not occur because it is not within the
scope of the Tax Law.
They are not subject to VAT among others and complying with the requirements that
in each case are determined:

1. The transfer of a set of tangible and intangible elements that, forming part of the
business or professional assets of the taxable person, constitute an autonomous
economic unit for the transferor capable of carrying out an economic activity by
his own means. It does not include the mere assignment of goods.-SALE OF A
BUSINESS

2. Operations carried out by the Public Administrations (unless they act as a

commercial company). PUBLIC SERVICES (HEALTH, EDUCATION, ETC.)

3. Supplies of goods and services for promotional purposes. NOT CHARGED

4. The services provided by natural persons under a dependency regime, derived from
administrative or labor relations, ordinary or special. INCOME FROM
EMPLOYEES AND CIVIL SERVANTS

5. Certain self-consumption of goods and services.

6. Certain concessions and administrative authorizations.

7. The supply of services free of charge which is compulsory for the taxable person
under legal rules or collective agreements, including telegraphic and telephone
services provided on a duty-free basis. FREE LEGAL OBLIGATIONS

8. The services provided to worker cooperatives by their members and those provided
to other cooperatives by their working partners. MEMBERS OF
COOPERATIVES (SIMILAR TO WORKERS)
 9. The operations carried out by the communities of Irrigators for the management
and use of water.

10. Deliveries of money by way of consideration or payment (PAYING IS NOT A

DELIVERY OF GOODS AND SERVICES).

In the VAT various EXEMPTIONS are contemplated Be careful, except for exports,
they do not give the right to deduct VAT paid to suppliers.

They are internal exemptions (those located in the vat territory), among others:

 Teaching in authorized public or private schools and private lessons by natural persons
on subjects included in the curricula of the educational system. Childcare services in
the school provided in interlective time. SCHOOLS, ACADEMIES,
UNIVERSITIES, ETC.

 Assistance to natural persons by medical professionals and health services.

DOCTORS, NURSES, HOSPITALS, DIAGNOSTIC TESTS, ETC.

 Professional services, including those whose consideration consists of copyright,

provided by plastic artists, writers, literary and graphic collaborators. COPYRIGHT.

 Operations and provision of services related to insurance, reinsurance and capitalization.

INSURANCE (THEY HAVE TAX ON INSURANCE PREMIUMS)

 Mediation services provided to natural persons in various financial operations.

FINANCIAL/BANKING OPERATIONS

 Rental of housing and delivery of rustic and non-buildable land, as well as second and
subsequent deliveries of buildings. HOUSING RENTAL
 Delivery of postage stamps and stamped effects of legal tender.

Among the exemptions related to foreign trade; the supply of goods dispatched
and transported outside the Spanish peninsular territory and the Balearic Islands,
either to other Member States or to third territories. (EXPORTS)

2 Taxation regimes
  
There is a general regime and special regimes:

o Simplified: entrepreneurs in the service sector, industrialists and

wholesalers and retailers who can be taxed under this regime
o Equivalence surcharge: for eligible retailers

o Agriculture, livestock and fisheries: for farmers and ranchers unless

waived or excluded
o Used goods, art objects, antiques and collectibles
o Travel agencies
o Investment Gold
o Special regimes applicable to telecommunications, radio and television
broadcasting services and those provided electronically.
o Group of entities
o Cash criteria

Farmers and stockbreeders excluded or who renounce the special regime

for agriculture, livestock and fishing or simplified regime, industrialists
who cannot pay taxes under the simplified regime and merchants who do
not meet the requirements of the simplified regime or the equivalence
surcharge and professionals, artists and athletes are taxed in the general
scheme. Entrepreneurs in the service sector can be taxed under the
general or simplified regime in some cases.
5.3 General regime
  
1. 5.3.1 To whom it applies
To taxable persons of VAT where none of the special schemes applies and where the
simplified scheme or the special scheme for agriculture, livestock and fisheries has
been waived or excluded.

2. 5.3.2 What does it consist of?

3. Whoever makes supplies of goods or services will pass on the VAT tax rate that
corresponds to the amount of the transaction, unless it is exempt or not subject:

1. Overall: 21%
2. Reduced by 10%: deliveries of foodstuffs, goods for agricultural,
forestry or livestock use, medicines for veterinary use, water,
pharmaceutical products for direct use by the final consumer (wadding,
gauze, bandages...), compresses, tampons, protective, condoms and other
non-medicinal contraceptives, medical equipment, appliances and other
instruments designed for the personal and exclusive use of people who
have physical deficiencies, mental, intellectual or sensory, dwellings,
garages and annexes, flowers and living plants and objects of art. Also
included, among others, are passenger transport services, renovation and
repair works of homes, hospitality and restaurants, agricultural, forestry
and livestock activities, and amateur sports services, social assistance,
trade fairs and exhibitions, cinemas, etc.
3. Super reduced 4%: basic foodstuffs, medicines for human use, books –
including books supplied on any physical medium, e.g. those delivered
through electronic files arranged for dumping to reading tools or portable
devices that allow storing and reading digitized books – newspapers and
magazines, school supplies, prostheses, orthoses and internal implants, as
well as vehicles for people with disabilities, etc.

4. Likewise, suppliers of goods and services will have passed on to them the
corresponding VAT.

5. The difference between the VAT due, that is, passed on to customers, and the
deductible input VAT, which is passed on to suppliers, must be calculated and,
where appropriate, paid each quarter or month (large companies, those registered
in the REDEME and entities covered by the special regime of the group of
entities).

5.3.3 Self-assessment models

Form 303 is used whether the settlement period is quarterly or monthly. However, if the
special regime of the group of entities has been chosen, the settlement period will be
monthly and form 322 and, where appropriate, form 353 will also be presented.
Form 368 "Declaration -periodic settlement of the special regimes applicable to
telecommunications, broadcasting or television and electronic services in VAT." will be
 submitted quarterly (upon presentation of form 034 of registration in the special
registry).
In addition, taxable persons must make an annual summary declaration, form 390.
However, they will not present form 390:

 Taxpayers with a quarterly settlement period who, taxed only in common territory, carry
out activities under a simplified VAT regime and /or whose activity consists of leasing
transactions of real estate of an urban nature.

 Taxpayers who keep the registration books through the Electronic Office of the State
Tax Administration Agency - SII.

If the settlement period is quarterly, the presentation of form 303 and, where
appropriate, the income or request for compensation is made between April 1 and 20,
July and October, except for the one corresponding to the last settlement period of the
year, in which you can also request the refund, between January 1 and 30 of the
following year. To direct debit the payment, the presentation is made online between
April 1 and 15, July and October and between January 1 and 25 (January 27, 2021
for Q4, 2020). Form 368 is filed between April 1 and 20, July, October and January
and regardless of whether or not they have provided technological services during the
declaration period.
The settlement is monthly for large companies, for those who choose to register in the
REDEME and for entities covered by the special regime of the group of entities (it is
chosen with the model 036 and 039 for groups of entities) using models 303, 322 and
353. The presentation of these forms and, where appropriate, the deposit or request for
compensation or refund is made between the 1st and the 30th of the month following
the end of the corresponding monthly settlement period except for the month of January
that will be presented until February 23.

Those who apply the SII are exempt from submitting forms 347 "Declaration of
operations with third parties" and 390 "Annual VAT declaration-summary".

If in any quarter there is no amount to be paid, it will be presented, as appropriate,

declaration without activity, to compensate or to return (the latter only in the last
quarter). The last month or quarter of form 303 must be submitted simultaneously with
the annual summary declaration, form 390.
If activities are carried out that are taxed simultaneously in general regime and in
simplified regime, form 303 will be presented, between April 1 and 20, July and
October (until the 15th if the payment is direct debited), and between January 1 and
30 of the following year (until the 25th if the payment is direct debited).

5.3.4 Form of presentation

Model 303 can be submitted:

 By Internet with electronic certificate (mandatory for corporations, and limited, large
companies and attached to the Central Delegation of Large Taxpayers (DCGC), those
registered in the REDEME and Public Administrations) or also with Cl@ve PIN (for
individuals).
 On printed paper (pre-declaration) generated exclusively by using the printing service of
the AEAT from the Internet, completing the forms available in the Electronic Office.

The model 390 can be presented:

 By Internet with electronic certificate (mandatory for public limited companies,

attached to the DCGC or to any of the Regional Units of Large Companies, Public
Administrations and taxpayers with a monthly settlement period) or also with a Cl@ve
PIN system (for individuals unless the above circumstances concur).

6. 5.3.5 Formal obligations

7. Make the declaration of registration of the activities covered by the regime, in
the form 036 or 037 that is also used to renounce or revoke the resignation, to
communicate the cessation of the activity and to communicate the inclusion or
exclusion of the regime.

8. Keep a record of invoices received, in which the acquisitions or imports of fixed

assets will be recorded separately, and the data necessary to carry out the
necessary regularizations. If other activities are carried out to which the
simplified regime does not apply, the acquisitions corresponding to each
differentiated sector of the activity shall be recorded separately.

9. Keep the documents that demonstrate the reality of the indexes or modules
applied.

10. Keep, numbered in order of dates, the invoices received (national and
Community suppliers), the accounting receipts in acquisitions of services with
investment of the taxable person if the supplier is outside the Community, and
the documents containing the settlement of the corresponding tax on imports.

11. Keep, numbered in order of dates and grouped by quarters, the invoices issued.

12. Submit the corresponding declarations-settlements -forms 303 and 390-, as well
as, where appropriate, provide information on operations with third parties -
model 347- and intra-community operations -model 349-.
5.5 Special regime for the equivalence surcharge
  
5.5.1 To whom it applies

Mandatory regime for certain activities of sectors established by the Law and that
applies to retail traders, natural persons, recumbent inheritances or communities of
goods when all their partners, commoners or participants are natural persons, who
market retail, articles of any nature, except the following products:

1. Motor vehicles for driving on the road and their trailers.

2. Boats and ships.

3. Airplanes, light aircraft, sailboats and other aircraft.

4. Accessories and spare parts of the above means of transport.

5. Jewelry, jewelry, precious stones, natural or cultured pearls, objects made totally or
partially with gold or platinum. Fine jewellery containing precious stones, natural
pearls or the aforementioned metals, whether bathed or plated, unless the gold or
platinum content is less than 35 microns thick.

6. Clothing or personal adornment made of sumptuous skins, except bags, purses and
similar objects, as well as garments made exclusively with scraps, heads, etc., or
with ordinary or imitation skins.

7. Original art objects, antiques and collectibles.

8. Goods used by the transferring taxable person or by third parties before they are
transferred.

9. Apparatus and accessories for poultry and beekeeping.

10. Petroleum products whose manufacture, import or sale is subject to Excise Duty.

11. Machinery for industrial use.

12. Materials and articles for the construction of buildings or urbanizations.

13. Minerals, except coal.

14. Irons, steels and other metals and their alloys, not manufactured.

15. Investment gold.

Retailers are those who usually sell movable or movable goods without subjecting
them to manufacturing, processing or manufacturing processes, if sales to final
consumers during the previous year exceed 80% of the total sales made. If the activity
was not exercised in that year or taxed in objective estimation in the Personal Income
Tax and has the status of retailer in the IAE, the requirement of the percentage of sales
will not apply.

If these requirements are not met, the general regime shall apply. However, there are
some retail activities that can be taxed under the simplified regime.
 5.5.2 What does it consist of?

Suppliers pass on to the merchant on the invoice, the corresponding VAT plus the
equivalence surcharge, separately and at the following rates:

 General rate of 21%:surcharge of 5.2%

 Reduced rate of 10%: surcharge of 1.4%
 Super-reduced rate of 4%: surcharge of 0.5%
 Tobacco: surcharge of 1.75%

The trader is not obliged to make any income for the activity (suppliers do), except for
intra-Community acquisitions, when he is a taxable person for investment and for sales
of real estate waiving the exemption.

5.5.3 Self-assessment models

Vat returns do not have to be submitted for activities under this special scheme.
However, when intra-Community acquisitions, transactions with investment of the
taxable person or supplies of immovable property subject and not exempt are made,
form 309 will be presented.

If deliveries of goods are made to travelers entitled to a VAT refund, form 308 will be
presented.

5.5.4 Formal obligations

 Prove to suppliers or Customs, which is under the regime of the equivalence surcharge.

 There is no obligation to issue an invoice or substitute document for the sales made,
except, among others, in supplies of real estate subject to and not exempt from The Tax.

 However, an invoice must be issued when the addressee is an entrepreneur or

professional, as well as when the recipient so requires for the exercise of any right of a
tax nature.

 There is no obligation to keep books for VAT, unless activities are carried out in other
different regimes in which case, in addition to the duty to comply with the formal
obligations established with respect to them, a record book of invoices received must be
kept to record with due separation, those related to acquisitions corresponding to
activities in equivalence surcharge.