Indirect Tax News 1 - March 2012 - BDO International

10 INDIRECT TAX NEWS 4
SPAIN
SPAIN REFERRED TO THE EUROPEAN COURT OVER USE OF THE REDUCED VAT RATE
Brussels has decided to report Spain to
the European Court of Justice (CJEU) for
transgressing the scope of the reduced
VAT rate for medical products. According to the
Council Directive 2006/112/EC, the reduced
rate may only apply to “medical equipment,
aids and other appliances normally intended
to alleviate or treat disability, for the exclusive
personal use of the disabled”.
However, the Spanish VAT Law states that
the reduced rate applies to “health products,
materials, equipment or instruments that,
objectively considered, may only be used to
prevent, diagnose, treat, alleviate or cure
diseases or ailments of humans or animals”.
The EU Executive contends that Spain is
exceeding its authority when applying the
reduced tax rate on all medical equipment,
aids to make up for deficiencies in disabled
animals, and substances used in the
manufacture of medicines, which distorts
competition.
European regulations allow the use of the
reduced VAT rate to pharmaceutical products
for medical purposes, but not to substances
used in the preparation of such medicines, and
even include an option that some articles can
benefit from special exceptions, which was not
used by Spain.
Impact in Spain
If the CJEU decides that Spain is transgressing
the scope of the reduced VAT rate in this
area, many products that are currently used
exclusively for medical purposes, but not for
disabled people, will become taxable at the
standard rate.
ROSARIO ESTELLA
CARLOS BAUTISTA
Spain – Madrid
rosario.estella@bdo.es
carlos.bautista@bdo.es
contact persons
The BDO VAT Centre of Excellence consists of the following persons:
Ivor Feerick (Chair) Ireland Dublin ifeerick@bdo.ie
Reinhard Rindler Austria Vienna reinhard.rindler@bdo.at
Erwin Boumans Belgium Brussels erwin.boumans@bdo.be
Annette Pogodda Germany Berlin VAT@bdo.de
Erwan Loquet Luxembourg Luxembourg erwan.loquet@bdo.lu
Rob Geurtse Netherlands Rotterdam rob.geurtse@bdo.nl
Tom Kivlehan United Kingdom Reading tom.kivlehan@bdo.co.uk
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