Spain is the only European country that does not have VAT exemptions for smaller companies. The rest of the European economies establish invoicing thresholds so that the smaller companies that are below them avoid the bureaucratic obstacles of declaring the tax. To avoid administrative and compliance costs, the rest of European countries have these thresholds for exemption from VAT. If a company is below a certain threshold for annual income, it is not required to participate in the VAT system. The UK has the highest VAT exemption threshold, at € 95,538. They are followed by Switzerland and France, with 93,414 euros and 85,800 euros. Spain is the only European economy that does not have a threshold, which means that all companies are in the VAT system.

Law 11/2021 on measures to prevent and fight tax fraud published in the BOE on July 10, modifies article 7 of Law 7/2012 that regulates the limitations on cash payments for certain operations.

The law establishes that operations, with an amount equal to or greater than 1,000 euros (previously € 2,500) or its equivalent in foreign currency, in which one of the parties acts as an entrepreneur or professional, cannot be paid in cash.

However, the aforementioned amount will be € 10,000 (previously € 15,000) when the payer is a natural person who justifies that he does not have his tax domicile in Spain and does not act as an entrepreneur or professional.

This limitation will apply to all payments made after the entry into force of the rule (as of July 11, 2021), even if they refer to operations arranged prior to the establishment of the limitation.

Law 11/2021 also modifies the regulation of the sanctioning procedure of the cash payment limitation regime, establishing some specialties.

Among the new features, we highlight that once the resolution proposal has been notified, the voluntary payment at any time prior to the notification of the final resolution will imply a 50% reduction in the amount of the penalty, and the waiver of making allegations.

The modifications of the sanctioning procedure will be applicable to the procedures that start from July 11, 2021.

Notwithstanding the foregoing, the new reduction in the penalty for voluntary payment will be applied to the penalties required prior to July 11, provided that they have not been appealed and have not acquired firmness. For these purposes, the competent Administration will rectify said sanctions.

The aforementioned reduction will also be applied, if the following circumstances concur:

a) That, from July 11, 2021 and before January 1, 2022, the interested party certifies before the competent Administration the withdrawal of the appeal filed against the sanction. Said accreditation will be made with the withdrawal document that has been submitted to the competent body to hear the appeal.

b) That within the period of section 2 of article 62 of the General Tax Law 58/2003, opened with the notification that the Administration makes for this purpose after the accreditation of said withdrawal, the payment of the remaining amount of the sanction is made.

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The Supreme Court has issued a ruling in which it establishes that expenses for public relations with clients and suppliers, as well as promotional expenses and gifts to clients or to the business personnel itself, are deductible in Corporation Tax. The ruling contravenes the criteria of the Treasury that only those accounting expenses related to the company's income can be deducted, that is, that directly influence its result. "Although there is no precise regulation on what is to be understood by correlation between income and expenses, both make up the financial management of the business activity, which as such is usually projected by carrying out a set of actions aimed at the obtaining a better result, which justifies that the relationship between expenses and income can be both direct and indirect, exhausting at the time of carrying out a specific operation or projecting into the future, "says the Supreme Court.

The Ministry of Finance wants to start its announced tax reform this year in which it will propose, among other measures, an increase in special taxes, specifically that imposed on tobacco consumption, as well as a review of the system of modules for which many self-employed workers and a rethinking of the deductions that currently exist in Corporation Tax, according to sources in this department. Regarding VAT, the Treasury wants to analyze the tax "calmly", although it admits that Spain makes greater use of reduced rates than other European countries and that the collection for this tax in relation to GDP is lower than the average of the EU. Harmonizing the taxes managed by the autonomous communities, specifically Successions and Donations, and Patrimony, is another of the objectives of the tax reform that the Government wants to approve this year, in addition to analyzing which are the most appropriate tax figures to tax wealth.

The prohibition of firing in companies covered by an ERTE, until six months after the day they incorporated the first worker, will end up in the hands of the judges of the Court of Justice of the European Union (CJEU). Several consulted magistrates recognize the deep doctrinal division that has occurred between the magistrates of the social jurisdiction and some have recognized the possibility of raising a preliminary question to their community colleagues so that they can interpret whether Spanish legislation is in line with EU law.